Robert Peston backs Liz Truss’s ‘extraordinary’ attack on Bank of England
Journalist Robert Peston has offered his support to ex-prime minister Liz Truss after she criticised the Bank of England’s response to the collapse of pension funds.
Ms Truss used the one-year anniversary of the disastrous mini-Budget to lash out at the BoE and urge Rishi Sunak’s government to cut taxes, shrink welfare spending, and raise the retirement age.
She called on the Conservative party to embrace free market ideologies and ditch green commitments amid rising cost of living pressures.
Ms Truss added that she felt “pressured” by the BoE to make a U-turn on her tax plans.
She also admitted she had never heard of the liability-driven investment (LDI) pension funds that were hit by her mini-Budget until after the economic crisis struck.
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Mr Peston said: “As I have said before, Liz Truss is on firmest territory when she criticises the Bank of England for allowing pension funds to take on excessive debt-fuelled exposure to government bonds via LDI schemes.”
He added: “It is extraordinary there has been no formal investigation of how this exposure was allowed to become so dangerous, who knew what and when about it in the Bank of England, the Treasury and Whitehall, precisely when Truss and Kwarteng were told about it, and what impact it had on the government funding crisis that was sparked by the mini budget.
“The impression has been created of an establishment cover up. This is deeply unhealthy for democracy.”
Former top Treasury official Rupert Harrison, the chief of staff to George Osborne when he was chancellor, said on Twitter/X that Ms Truss had a “brass neck” in giving advice to Mr Sunak.
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The BoE called for “urgent” global action after the near-collapse of the UK’s pension funds as a result of the mini-Budget.
It came after a series of massive moves in interest rates on government debt exposed vulnerabilities in liability-driven investment (LDI) funds, which are held by UK pension schemes.
At the time of September’s bond price crash, long-dated bonds comprised around two-thirds of Britain’s roughly £1.5 trillion in LDI funds.
The Bank emphasized the need for regulators across jurisdictions to strengthen the resilience of the sector, saying “there is a need for urgent international action to reduce risks in non-bank finance”.
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