Secret Bank of England transfer exhibits Liz Truss ‘not entirely to blame for economic meltdown’ | Politics | News | EUROtoday

A secret transfer by the Bank of England means that Liz Truss’s catastrophic mini-Budget with unfunded tax cuts was not totally guilty for the UK’s financial meltdown, a monetary professional has mentioned.

Tax guide Bob Lyddon mentioned the creation of a Contingent Non-Bank Financial Repo Facility (CNRF) — designed to ease cashflow to non-bank monetary establishments throughout a downturn — confirmed that not all is “rosy” with the UK economic system.

Ms Truss and her chancellor Kwasi Kwarteng’s 2022 plans, which additionally included elevated borrowing, had been usually seen as the reason for Britain’s hovering inflation.

It led to her removing from workplace after simply 49 days, making her the shortest-serving prime minister in British historical past.

However, Mr Lyddon, who based Lyddon Consulting Services, “implosion” within the economic system “occurred because these were high-risk financial instruments through which the pension funds had taken a massive punt on UK interest rates that went spectacularly wrong when interest rates started rising at the end of 2021”.

He added: “It was fine for the Bank, and a phalanx of other self-interested parties, to heap the entire blame for the meltdown onto the mini-Budget and on to Liz Truss and Kwasi Kwarteng.

“The creation of the CNRF is a belated admission that there was much more to it than that.”

Mr Lyddon mentioned the CNRF has been launched this 12 months “as if it were a response to the fall of Silicon Valley Bank and Credit Suisse in 2023”.

But he believes it was really completed to “dampen down the powder keg” of present threat to the UK economic system.

Ms Truss has usually blamed Liability-Driven Investments (LDIs), the place pension funds are invested, for the financial shock that induced her downfall.

Mr Lyddon mentioned of the Bank of England: “In its anxiety to pin the entire blame for the meltdown on the mini-Budget, it could not contradict its own PR by admitting any contributory errors on its side.

“Two years have elapsed since then in which the underlying problems have continued to expand unchecked. Now we have a belated and heavily disguised admission that not all in the garden is rosy.

“The CNRF looks suspiciously like a sticking plaster. It does not eliminate the risk of the powder keg blowing sky-high.

“If it does, the Bank won’t have Liz Truss and Kwasi Kwarteng to blame this time around.”

The Express has approached the Bank of England for remark.