Kwasi Kwarteng is trying to reassure city bosses about the British economy

Britain’s Chancellor Kwasi Kwarteng has told top bankers, insurers and wealth managers he is “confident” his economic strategy will work as he tries to calm the City of London after days of financial market turmoil.

The meeting between Kwarteng and heads of companies including Aviva, Legal and General, Royal London, BlackRock, Fidelity and JPMorgan came the day after the pound sterling was unveiled in response to the Chancellor’s mini-budget unveiled last week , had hit a record low against the US dollar.

Kwarteng used the meeting, ostensibly scheduled to discuss regulatory reforms in the city, to try to reassure top bankers and investors that he had the situation under control.

The Chancellor said he was meeting daily with Bank of England Governor Andrew Bailey to try to stabilize markets. “We work closely together,” he said.

The pound rose against the dollar on Tuesday after falling sharply the previous day but remained near its lowest level since 1985 at $1.08. The UK government’s borrowing costs are on track for one of their biggest monthly rises on record, during Mortgage lenders stopped offering new home loans on Monday due to market volatility.

Kwarteng said he remains committed to bringing debt under control and insisted his £45 billion in tax cuts – to be funded by borrowing – would boost growth in the medium term.

“We are confident in our long-term strategy of driving economic growth through tax cuts and supply-side reforms,” ​​he said. “Supply-side reforms are crucial – increasing capacity lowers prices.”

In a reading of the meeting issued by the Treasury Department, Kwarteng also told city leaders, “We are committed to fiscal discipline and will not reopen the spending review.”

He said he would release “a credible plan to reduce debt-to-GDP ratio” on November 23, alongside forecasts from the independent Office for Fiscal Responsibility.

“We responded in the short-term with an expansionary fiscal stance on energy because we had to,” Kwarteng said. “We had to intervene in two exogenous shocks – Covid-19 and Ukraine. Our 70-year high tax burden was also unsustainable.

“I am confident that our approach will work with our growth plan and the forthcoming medium-term financial plan – in close cooperation with the bank.”

The Chancellor also said that a so-called Big Bang 2.0 reform package is a top priority for the city. The details are to be determined in the coming weeks.

Kwarteng has already announced the removal of the cap on bankers’ bonuses and told financial services leaders that he will “fix” Solvency II, the EU rules governing the insurance sector.