Britain's new Prime Minister, Rishi Sunak on the day announced that the administration will delay the announcement of the much-anticipated financial plan. Observers want to see how Rishi Sunak will repair the country's public finances. The adjournment was postponed until November 17, two and a half weeks later than planned.
The delay is Sunak's first policy decision since taking over the administration from Liz Truss on Tuesday. There has previously been panic selling in bonds due to the planned Truss tax cuts in September. What about the market's reaction to the plan is still a question until the announcement.
Finance minister Jeremy Hunt announced the delay in a televised statement saying he needed more time to ensure the new plan went ahead in light of the latest economic forecasts.
The plan is expected to set out how the government will cover a budget shortfall of 40 billion pounds ($46 billion). Unlike last month's Truss plan, it will be fully audited by Britain's fiscal watchdog.
A statement from Sunak's office said he told his cabinet that it was "important to reach the right decision and use the available time to make a decision".
Britain's credibility in the financial markets was previously at stake when Truss announced his unfunded tax cuts, sparking a panic in the bond market so severe that the Bank of England had to intervene and Truss eventually resigned.
"Our number one priority is economic stability and restoring confidence that the United Kingdom is a country that can be relied upon", said Hunt.
The GDP currency still maintains its strengthening momentum against the US dollar. The movement in the bond market was minor compared to the massive sell-off triggered by the Truss in September.
The delay of the budget plan will complicate the BoE's task next week when it is expected to publish economic forecasts without knowing the details of the government's fiscal plan, as well as take its latest monetary policy decision.
The BoE is expected to raise interest rates again on November 3, possibly to 3.0% from 2.25% although investors increased their bets by a full percentage point increase after the announcement of the budget plan delay.
