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| Markets rally on talk of mini-budget U-turn | Markets rally on talk of mini-budget U-turn |
| (32 minutes later) | |
| UK shares have risen and government borrowing costs have fallen as speculation mounts about a possible U-turn over the mini-budget. | |
| The FTSE 100 index of leading shares was up by around 1.2% on Friday. | The FTSE 100 index of leading shares was up by around 1.2% on Friday. |
| As the backlash continues over the mini-budget, Chancellor Kwasi Kwarteng has been sacked. | |
| The pound dipped to around $1.12 as financial markets waited for Prime Minister Liz Truss to hold a press conference. | The pound dipped to around $1.12 as financial markets waited for Prime Minister Liz Truss to hold a press conference. |
| On Thursday, the pound jumped by more than 2% to well above $1.13 against the dollar, as rumours circulated that a U-turn could be imminent. | On Thursday, the pound jumped by more than 2% to well above $1.13 against the dollar, as rumours circulated that a U-turn could be imminent. |
| The pound initially held gains on Friday morning before losing some ground. | The pound initially held gains on Friday morning before losing some ground. |
| Government borrowing costs on debt due to be repaid in 30 years fell to 4.26%. They had hit 5.17% on 28 September in the aftermath of the mini-budget when Mr Kwarteng set out £45bn in tax cuts but did not explain how they would be funded. | Government borrowing costs on debt due to be repaid in 30 years fell to 4.26%. They had hit 5.17% on 28 September in the aftermath of the mini-budget when Mr Kwarteng set out £45bn in tax cuts but did not explain how they would be funded. |
| The pound also hit a record low of $1.03 at the time. | The pound also hit a record low of $1.03 at the time. |
| The Bank of England has been buying government bonds - known as gilts - to try to stabilise their price and prevent a sell-off that could put some pension funds at risk of collapse. | The Bank of England has been buying government bonds - known as gilts - to try to stabilise their price and prevent a sell-off that could put some pension funds at risk of collapse. |
| However, that support is due to come to an end on Friday. | However, that support is due to come to an end on Friday. |
| There has been speculation it may be extended, although this was dismissed by the Bank's governor, Andrew Bailey, earlier this week. | There has been speculation it may be extended, although this was dismissed by the Bank's governor, Andrew Bailey, earlier this week. |
| The government has already U-turned on its plan to scrap the top rate of income tax, but many Conservative MPs think a further change of plan is imminent. | The government has already U-turned on its plan to scrap the top rate of income tax, but many Conservative MPs think a further change of plan is imminent. |
| Senior Conservative MP Mel Stride, the chair of the Treasury Committee, said the government has to take decisive action. | Senior Conservative MP Mel Stride, the chair of the Treasury Committee, said the government has to take decisive action. |
| "The danger here is that they decide they are going to nibble at the edges of this and don't think that will cut it," he told the BBC. | "The danger here is that they decide they are going to nibble at the edges of this and don't think that will cut it," he told the BBC. |
| "You could end up in that circumstance in the worst of worlds - that you've U-turned but it doesn't settle the markets." | "You could end up in that circumstance in the worst of worlds - that you've U-turned but it doesn't settle the markets." |
| The government raises money it needs for spending by selling bonds - a form of debt that is paid back plus interest in anywhere between five and 30 years. | The government raises money it needs for spending by selling bonds - a form of debt that is paid back plus interest in anywhere between five and 30 years. |
| Pension funds invest in bonds because they provide a low but usually reliable return over a long period of time. | Pension funds invest in bonds because they provide a low but usually reliable return over a long period of time. |
| However, the sharp fall in their value after the mini-budget forced pension funds to sell bonds, threatening to create a "downward spiral" in their prices as more were offloaded, which left some funds close to collapse. | However, the sharp fall in their value after the mini-budget forced pension funds to sell bonds, threatening to create a "downward spiral" in their prices as more were offloaded, which left some funds close to collapse. |
| This sparked an emergency intervention by the Bank of England, which stepped in to buy bonds and prevent their price falling further. | This sparked an emergency intervention by the Bank of England, which stepped in to buy bonds and prevent their price falling further. |
| There has been strong speculation that the Bank will extend the scheme, which is due to end on Friday. | There has been strong speculation that the Bank will extend the scheme, which is due to end on Friday. |
| But on Tuesday, Mr Bailey dashed those hopes, telling pension funds: "You've got three days left now and you've got to sort it out." | But on Tuesday, Mr Bailey dashed those hopes, telling pension funds: "You've got three days left now and you've got to sort it out." |
| Bethany Payne, global bonds fund manager at Janus Henderson, told the BBC it was not clear whether pension funds have done enough to strengthen their finances. | Bethany Payne, global bonds fund manager at Janus Henderson, told the BBC it was not clear whether pension funds have done enough to strengthen their finances. |
| "The risk is that we don't know how pension funds have used this window of time and whether they have used it effectively by raising cash and doing everything they need to," she said. | "The risk is that we don't know how pension funds have used this window of time and whether they have used it effectively by raising cash and doing everything they need to," she said. |
| "So the true test of the market will be this afternoon and Monday morning to see whether they have done enough." | "So the true test of the market will be this afternoon and Monday morning to see whether they have done enough." |