Bank of England head Andrew Bailey denies role in Liz Truss’s downfall
The Bank of England Governor has denied having any part in the downfall of Liz Truss.
In an interview with Sky News, Andrew Bailey said that he “vehemently disagrees” with allegations that the Bank‘s actions precipitated the departure of the former prime minister.
It followed claims from Narayana Kocherlakota, the former president of America’s Federal Reserve Bank of Minneapolis, in a Bloomberg article, that the critical decision that sealed Ms Truss’s fate was when the UK central bank ended its emergency support for the bond markets last month.
However, in an interview recorded alongside the publication of its forecasts earlier this month, Mr Bailey told Sky News: “I vehemently disagree with [that analysis]… it is based on a fallacy.
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‘Bank of England played no part in Truss downfall’
“The argument is that we should have continued our intervention. And that had we done so, the world would have turned out differently. But what that misses is that our intervention, as a central bank, as it should be, was to address a precise financial stability problem, particularly connected to parts of the pensions fund industry.
“I’m afraid had we gone on with that intervention, beyond the point of financial stability being suitably restored, we’d have been creating another problem, which is what economists tend to call a moral hazard problem, ie people would have said: ‘well the Bank of England’s always going to intervene’, and that’s wrong. We did the job we set out to do.”
Asked whether he bore responsibility for Liz Truss‘s departure, he said: “No, of course we didn’t depose Liz Truss. I would never do anything like that.”
Economic fallout
The comments come with the UK economy now officially shrinking, in what many economists – including the Bank of England – believe is the beginning of a potentially protracted recession.
The new chancellor, Jeremy Hunt, is due to unveil a package of spending cuts and tax rises later this week, in what the government is casting as a repair job following the mini-budget.
The governor said that while the interest rates on government bonds had fallen sharply since the period of chaos, among the main victims of the disruption were those who signed up to fixed rate mortgages during that period.
“I have a great deal of sympathy for [those people]… It is very unfortunate what has happened.”
Gerard Lyons, an economist who offered some advice to the Truss team, says he warned them about the risk of a market disturbance.
“We said markets are in the very febrile state,” he said. “If your policy actions are not clear, and not understood, there will be a market crisis. It was quite clear that markets were worried about inflation. Markets were in the febrile state. And they were concerned about any change in UK economic policy, therefore, it was vital.
“I said this publicly and privately that: ‘you needed to convince the markets that any fiscal action was necessary, not inflationary, and affordable’.”
A “maverick left-wing crazy”
Yanis Varoufakis
Former Greek finance minister Yanis Varoufakis – often described as one of the most maverick people to have held such a role in recent history – said that Kwasi Kwarteng‘s mini-budget was considerably more radical than anything he ever proposed or implemented.
“I was not Maverick at all,” he said. “All I tried to do was to say that, you know, we are bankrupt, Greece is bankrupt – that I’m not going to take another credit card to pretend that I’m repaying my loans.
“I should have been celebrated by the most conservative economists and politicians in the world and instead I was demonised as a maverick left-wing crazy.
“Kwarteng, on the other hand, simply followed the strategy of assuming that just because the markets are calm today, they will remain calm tomorrow… and the markets called them out.”
However, many market insiders are worried that even now, markets remain in a febrile state.
“The problems haven’t haven’t gone away,” said Daniela Russell, head of UK rates strategy at HSBC bank.
“Perhaps this isn’t just an isolated incident, but it could be the sort of a trend. One thing that’s particularly concerning to me is that there’s an awful lot of debt in the system.”
Cineworld’s hedge fund backers are drawing up plans to return the cinema operator to the public markets amid continuing uncertainty about the future of dozens of its British sites.
Sky News has learnt that the company’s owners are at the early stages of considering a New York listing for the business, with the first half of 2026 considered a likely window for it to take place.
City insiders said that a flotation was likely to encompass Cineworld’s operations outside the UK, with the group’s board expected to consider a sale of the British operations at some point.
They cautioned, however, that no decisions had been reached and would not be for some time.
The fate of Cineworld’s business in the UK has been mired in uncertainty for months, with the company initially exploring a sale of it before turning to a restructuring plan which compromises many of its landlords and other creditors.
It has announced the permanent closure of six sites, but it emerged last month that nearly 20 more were at risk of being shut amid ongoing talks with property owners.
The restructuring plan is due to complete later this month, which some landlords have opposed over the fairness of its terms.
Documents circulated as part of the restructuring plan process highlighted the fact that the company did not have sufficient funding to meet a quarterly rent bill on June 24 of £15.9m.
“Absent this funding, the UK Group would have been insolvent on a cashflow basis,” they said.
Other cinema operators, such as Odeon, are now poised to step in to take over small numbers of Cineworld’s other sites.
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The company trades from more than 100 locations in Britain, including at the Picturehouse chain, and employs thousands of people.
Cineworld grew under the leadership of the Greidinger family into a global giant of the industry, acquiring chains including Regal in the US in 2018 and the British company of the same name four years earlier.
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Pizza Hut UK hunts buyer amid budget tax crisis
Former Tory minister eyes top job at football regulator
Its multibillion-dollar debt mountain led it into crisis, though, and forced the company into Chapter 11 bankruptcy protection in 2022.
It delisted from the London Stock Exchange in August 2023, having seen its share price collapse.
In addition to the UK, Cineworld also operates in central and Eastern Europe, Israel and the US.
Cineworld has been contacted for comment.
A former Conservative cabinet minister has thrown his hat into the ring to become the inaugural chair of Britain’s new independent football regulator.
Sky News has learnt that Chris Heaton-Harris, who stood down as an MP at July’s general election, is among those who applied for the role ahead of a deadline on Friday.
Mr Heaton-Harris is himself a qualified football referee who has officiated at matches for decades.
A former Northern Ireland secretary and chief whip under Rishi Sunak and Boris Johnson respectively, he said in 2022 of his part-time career as a football official: “I took a [refereeing] course and that was it, I’ve been going ever since.
“Football has done wonders for me throughout my life so I would recommend it to everybody.”
Mr Heaton-Harris is among a large number of people who have applied for the role of chair at the Independent Football Regulator (IFR), according to officials.
A publicly available timetable for the search says that interviews for the £130,000-a-year post will end on 11 December, with an appointment expected in the new year.
It is the second time that the government has embarked on a search for a chair for the IFR after an earlier hunt was curtailed by the general election.
The role will be based at the watchdog’s new headquarters in Manchester and will require a three-day-a-week commitment.
The Football Governance Bill had its second reading in the House of Lords this week, as part of a process that will represent the most fundamental shake-up in the oversight of English football in the game’s history.
The Labour administration has dropped a previous stipulation that the regulator should have regard to British foreign and trade policy when determining the appropriateness of a new club owner.
The IFR will monitor clubs’ adherence to rules requiring them to listen to fans’ views on issues including ticket pricing, while it may also have oversight of the parachute payments made to clubs in the years after their relegation from the Premier League.
The top flight has issued a statement expressing reservations about the regulator’s remit, while it has been broadly welcomed by the English Football League.
The IFR’s creation will come with the Premier League embroiled in a civil war over Manchester City‘s legal battles emanating from allegations that it breached the competition’s financial rules.
Keep up with all the latest news from the UK and around the world by following Sky News
Next week, the 20 Premier League clubs will meet for a lengthy shareholder meeting, with a vote on amended Associated Party Transaction rules hanging in the balance.
The league needs 14 clubs to vote in favour for the rule changes to be passed.
Contrary to earlier expectations, however, a detailed discussion on a financial distribution agreement between the Premier League and EFL is unlikely to be on the agenda.
A Department for Culture, Media and Sport spokesperson said: “The process for recruiting the Independent Football Regulator chair is under way but no appointment decisions have been made.
“We do not comment on speculation.”
This weekend, Mr Heaton-Harris could not be reached for comment.
Pizza Hut’s biggest UK franchisee has begun approaching potential bidders as it scrambles to mitigate the looming impact of tax hikes announced in last month’s Budget.
Sky News has learnt that Heart With Smart (HWS), which operates roughly 140 Pizza Hut dine-in restaurants, has instructed advisers to find a buyer or raise tens of millions of pounds in external funding.
City sources said this weekend that the process, which is being handled by Interpath Advisory, had got under way in recent days and was expected to result in a transaction taking place in the next few months.
HWS, which was previously called Pizza Hut Restaurants, employs about 3,000 people, making it one of the most significant businesses in Britain’s casual dining industry.
It is owned by a combination of Pricoa and the company’s management, led by chief executive Jens Hofma.
They led a management buyout reportedly worth £100m in 2018, with the business having previously owned by Rutland Partners, a private equity firm.
One source suggested that as well as the talks with external third parties, it remained possible that a financing solution could be reached with its existing backers.
HWS licenses the Pizza Hut name from Yum! Brands, the American food giant which also owns KFC.
Insiders suggested that the increases to the national living wage and employers’ national insurance contributions (NICs) unveiled by Rachel Reeves would add approximately £4m to HWS’s annual costs – equivalent to more than half of last year’s earnings before interest, tax, depreciation and amortisation.
One added that the Pizza Hut restaurants’ operation needed additional funding to mitigate the impact of the Budget and put the business on a sustainable financial footing.
The consequences of a failure to find a buyer or new investment were unclear on Saturday, although the emergence of the process comes amid increasingly bleak warnings from across the hospitality industry.
Keep up with all the latest news from the UK and around the world by following Sky News
Last weekend, Sky News revealed that a letter co-ordinated by the trade body UK Hospitality and signed by scores of industry chiefs – including Mr Hofma – told the chancellor that left unaddressed, her Budget tax hikes would result in job losses and business closures within a year.
It also said that the scope for pubs and restaurants to pass on the tax rises in the form of higher prices was limited because of weaker consumer spending power.
That was followed by a similar letter drafted by the British Retail Consortium this week which also warned of rising unemployment across the industry, underlining the Budget backlash from large swathes of the UK economy.
Even before the Budget, hospitality operators were feeling significant pressure, with TGI Fridays collapsing into administration before being sold to a consortium of Breal Capital and Calveton.
Sky News recently revealed that Pizza Express had hired investment bankers to advise on a debt refinancing.
HWS operates all of Pizza Hut’s dine-in restaurants in Britain, but has no involvement with its large number of delivery outlets, which are run by individual franchisees.
Accounts filed at Companies House for HWS4 for the period from 5 December 2022 to 3 December 2023 show that it completed a restructuring of its debt under which its lenders agreed to suspend repayments of some of its borrowings until November next year.
The terms of the same facilities were also extended to September 2027, while it also signed a new 10-year Pizza Hut franchise agreement with Yum Brands which expires in 2032.
“Whilst market conditions have improved noticeably since 2022, consumers remain challenged by higher-than-average levels of inflation, high mortgage costs and slow growth in the economy,” the accounts said.
It added: “The costs of business remain challenging.”
Pizza Hut opened its first UK restaurant in the early 1970s and expanded rapidly over the following 15 years.
In 2020, the company announced that it was closing dozens of restaurants, with the loss of hundreds of jobs, through a company voluntary arrangement (CVA).
At that time, it operated more than 240 sites across the UK.
Mr Hofma and Interpath both declined to comment.
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