UK economy shrinks in August; pound rises on hopes of bond-buying extension – business live

Business group says 0.3% fall in monthly GDP is ‘warning sign that economy already stalling before market turmoil of recent weeks’

The pound is back in negative territory versus the dollar, dipping 0.02% to $1.0961, amid worries over the UK economy – which shrank 0.3% in August according to official figures released today – and the end of the Bank of England’s emergency bond-buying programme this Friday.

Jacob Rees-Mogg, the UK business and energy secretary, said he had confidence in the governor of the Bank of England, Andrew Bailey, adding that he did not think there was a systemic problem in pension funds.

Yes of course I’ve got confidence in the governor of the Bank of England. It is so important that we have an independent Bank of England with a respected governor. Andrew Bailey is a respected governor and the Bank of England’s independence is operating as it should. He must make the decisions in relation to market support.

What this is doing is rationalising the market in a way that energy companies have been in favour of to move to contracts for difference which provides them with security for pricing over the longer term.

This is not a windfall tax. It’s clearly not a tax, it’s nothing to do with the profits these companies are making, it’s to do with the pricing structure that is agreed with the renewable companies to ensure that it is a good long-term approach, which is why all new contracts, over the last five years or so, have been signed on a contract for difference basis.

The intervention a couple of weeks ago as a percentage of GDP is not that enormous.

It’s much more to do with interest rates than it is to do with a minor part of fiscal policy.

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