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The pound is back at 1.14 euro and 1.11 dollar. Crisis over? Who bought the dip?
Kwasi Kwartengâs âbudget dayâ cocktail party with financiers who may have profited from crash
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Saturday October 01 2022, 6.00pm, The Sunday Times
Some hedge fund bosses have described Kwasi Kwarteng as a âuseful idiotâ
CHRIS J RATCLIFFE/GETTY IMAGES
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Kwasi Kwarteng attended a private champagne reception hours after delivering his mini-budget where hedge fund managers who would gain from a crash in the pound egged him on to commit to his plans.
The chancellor also gave guests insights about forthcoming government spending cuts during the event, which took place at the Chelsea home of Andrew Law, a financier and Conservative Party donor, on the evening of Friday, September 23.
The disclosure raises questions about Kwartengâs political judgment. It will also raise concern that the event informed his decision to announce plans for even bigger tax cuts despite the marketâs negative reaction to his initial plans.
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Key points from the chancellorâs mini-budget
Kwarteng declared there was âmore to comeâ in an interview on the Sunday after his mini-budget â a move that some No 10 officials blame for triggering a further fall in the pound on Monday morning.
Sterling collapsed to its lowest level since 1985 amid market turmoil which, alongside Kwartengâs ÂŁ45 billion tax giveaway for the highest earners, benefited many of those at the drinks event.
After the reception on Friday, at least two prominent hedge fund bosses told City associates that Kwarteng was âa useful idiotâ. A senior Tory who advises business leaders said the phrase was in widespread circulation.
Law is worth about ÂŁ750 million and has donated ÂŁ3.6 million to the Tories since 2004. He has acknowledged taking short positions on the pound over recent years, meaning he has profited from the currencyâs decline in value.
Top row left to right: Jake Berry, Sir Henry Angest and Andrew Law were invited to a drinks reception. Bottom row: Lord Leigh of Hurley, Howard Shore and Selva Pankaj also attended
He invited about 30 people to his west London home for the drinks reception, including the stockbroker Howard Shore; the Swiss-born London banker Sir Henry Angest; Lord Leigh of Hurley, a corporate financier; Selva Pankaj, a merchant banker and investor; and Jake Berry, the Conservative Party chairman.
Others present included William Salomon, a senior partner at Hansa Capital, and Andrew Dawber, director of Civitas Investment Management. The event was also attended by representatives from the property, hospitality, healthcare and education sectors.
Guests drank wine, champagne and cocktails as they congratulated Kwarteng on the reforms he had outlined in the House of Commons.
According to a source, the ambience was âvery, very positiveâ. Another said guests explicitly told Kwarteng to âdouble downâ â an approach from which some stood to make enormous profits.
Two sources say Kwarteng described the Friday as a âgreat day for freedomâ. A third said: âHe was high on adrenaline. His big thing was: âLook, weâre not going to do stuff incrementally. We really believe in this stuff and thatâs what weâre going to do.â â
Kwarteng is also said to have warned those present of austerity-style budget cuts to come. A source said: âHe wanted to give an unadulterated message of âgrowth, growth, growthâ, and thatâs why he didnât talk about savings, because otherwise the [news] agenda would have been all about savings â âwhere will you cut? What will you cut? Blah blah blahâ â theyâre fully aware they have to make savings.â
The source added that Kwarteng appeared tired but pleased in a convivial atmosphere.
As it was a party, officials would not be required to disclose it on ministerial transparency returns.
The chancellor went on to tell the BBCâs Laura Kuenssberg that he would slash more taxes, and confirmed he would neither bring forward his November budget nor ask the Office of Budget Responsibility to publish its forecasts of his plans.
His actions led the Bank of England to take action â at a cost of ÂŁ65 billion â to calm the markets and prevent a meltdown in the UK pensions sector.
A source who attended the Law drinks party said Kwarteng seemed surprised by the reaction of the markets. âI think maybe he didnât see it coming,â he said.
Allies of the chancellor have dismissed claims that his proximity to hedge fund managers has influenced his decision-making in office.
Crispin Odey, the chancellorâs former boss, privately dined with him during the Tory leadership contest
HOLLIE ADAMS/BLOOMBERG/GETTY IMAGES
Last week, it was revealed that during the leadership contest he privately dined with Crispin Odey, a hedge fund investor and Kwartengâs former boss, who has since said that bets against UK government bonds were the âgifts that keep on givingâ.
Odey, a prominent Tory donor who also gave ÂŁ870,000 to pro-Brexit campaign groups, founded the hedge fund Odey Asset Management, where Kwarteng worked before entering politics.
The latest revelations will heap more pressure on the chancellor, who was the co-author with Liz Truss of a financial package that has seen the Conservative Party fall to its lowest rating in the polls since the 1990s. No 10 insisted last week that he will not resign.
Tory officials confirmed that Kwarteng attended the gathering at Lawâs home, which was arranged by the Conservative Partyâs campaign headquarters, for an hour to talk through his mini-budget plans, giving a five-minute speech.
A source close to the chancellor said: âAny suggestion attendees had access to privileged information is total nonsense. The Growth Plan [published earlier that day] included a commitment to review our tax code to make it simpler, better for families and more pro-growth. The governmentâs ambitions on lowering the tax burden are hardly a state secret.â
Read that this morning and it gave me a chuckle.
In fairness if thatâs the plan, itâs the plan. They sink or swim by it. Itâs about time the economic Brexiteers put up or shut up on their ideology.
Boris got brexit done. Truss went on a solo run
Backtrack
A massive U turn from Maggie lite
She threw kwasi under the bus fully and blatantly. She really is a horrible person. I thought she was just a vain idiot, but thereâs a streak of genuine nastiness in there too.
Not defending her but she did say that the cut in the top rate was a solo run by Kwasi.
Has the Gover mugged off Lizzie?
She did, after saying for weeks they had planned everything together over biscotti and coffee in Greenwich.
She hailed her own economic plan from the rafters. Now the unpopular bits were kwasis. She only made up the rest.
Sheâs an absolute witch.
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Either way, I still canât see her lasting beyond Christmas. Sheâs after mugging Charlie off as well. I watched an interview with Gove yesterday and he stuck the knife in without quite twisting it
To do that to an ex boyfriend is so cruel
Good description. Seeing that reminded me of a manager I had once, a perfect description, Truss is the exact same. Vain, nasty, capricious and vindictive, self protect at all costs, not without some cunning but completely and utterly out of her depth.