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Banks urge Kwasi Kwarteng to outline plans before November budget

Kwasi Kwarteng walks outside Downing Street
Kwasi Kwarteng will highlight the importance of the reforms ministers will be setting out in the coming weeks to boost UK growth, including his 'Big Bang 2.0' measures to further liberalise financial market regulation. Photo: Maja Smiejkowska/Reuters

A number of US banks have urged chancellor Kwasi Kwarteng to outline the details of his economic plans before the November budget.

The finance minister met with executives on Wednesday in a bid to reassure the City and financial markets about his highly-criticised economic plans. However, they warned that the next budget was “way too far away”.

Representatives from the likes of Bank of America (BAC), JP Morgan (JPM), Standard Chartered (STAN.L), Citi (C), UBS (UBS), Morgan Stanley (MS) and Bloomberg all attended the meeting.

Bosses at the lenders and investment companies told Kwarteng that he needed to “communicate frequently, and overcommunicate, if necessary”, according to the Telegraph.

During the meeting, Kwarteng highlighted the importance of the reforms ministers will be setting out in the coming weeks to boost UK growth, including his “Big Bang 2.0” measures to further liberalise financial market regulation.

The Treasury said: "The chancellor underlined the government’s clear commitment to fiscal discipline and reiterated that he is working closely with the governor of the Bank of England and the OBR [Office for Budget Responsibility] ahead of delivering his medium term fiscal plan on 23 November."

However, he did not indicate that he might bring forward the timetable for new fiscal rules.

Sky News earlier reported that he will also ask financiers not to bet against the pound (GBPUSD=X), which hit a record low against the dollar on Monday at $1.0327, however, the Treasury Department denied that Kwarteng asked bankers not to short the currency.

It comes after the finance minister spoke to City chiefs on Tuesday and doubled down on his tax-cutting fiscal plans.

Meanwhile, the International Monetary Fund (IMF) and ratings agency Moody’s laid into the government’s recent economic strategy on Wednesday, which includes £45bn of tax cuts funded by government borrowing.

In a rare intervention, the IMF said it was “closely monitoring” developments in the UK and that it was in touch with the authorities, urging the finance minister to “re-evaluate the tax measures”.

“Given elevated inflation pressures in many countries, including the UK, we do not recommend large and untargeted fiscal packages at this juncture, as it is important that fiscal policy does not work at cross-purposes to monetary policy,” it said.

It further warned the current plans, including the abolition of the 45p rate of income tax for people on more than £150,000, are likely to increase inequality across Britain.

Read more: Why has the pound fallen and what does this mean for you?

On Friday, Kwarteng unveiled the country's biggest tax package in 50 years causing investors to dump the pound and UK debt.

The Bank of England (BoE) also suggested that sharp interest rate rises could be on the way to shore up the pound, while some of the country's biggest lenders also suspended mortgage deals amid the uncertainty.

Analysts have now predicted that the BoE base rate may have to rise from 2.25% as high as 6% next year.

However, the chancellor has insisted he remained “confident” his tax-cutting strategy will deliver the promised economic growth.

Watch: How does inflation affect interest rates?