The boss of the City watchdog appeared to skirt committing to investigating Treasury briefings when pressed on the Labour government’s “possible market abuse” on Wednesday morning.
Nikhil Rathi, chief executive of the Financial Conduct Authority, has been lobbied by the Conservatives and other opponents to the Labour government to look into the rogue briefings on the road to the Budget.
During a panel at the Financial Times’ Global Banking Summit, Rathi was asked whether the FCA would “look at” the allegations of market abuse.
The FCA boss said: “We have had some letters in from MPs, we have a specific remit and we will be replying shortly to that.”
When pressed whether the watchdog would commit to “looking into” the briefings “whether it leads to a full investigation or not” Rathi ducked a direct response, stating the FCA would “reply” to the letters.
Shadow Chancellor Mel Stride called for Rathi to investigate potential market manipulation by the government after Rachel Reeves was accused of “misleading” the country over a manifesto-breaking income tax hike, only to weeks later ditch the idea.
“Confidential market sensitive information appears to have been spun, leaked and misused – and markets, businesses and families have paid the price,” Stride wrote in his letter.
Treasury and OBR spat heats up
Tensions have continued to flare over the timeline on the road to the Budget, with both No.10 and No.11 Downing Street coming under fire for misleading the country and – as some reports suggest – their own cabinet ministers.
On Tuesday, a top economist at the Office for Budget Responsibility (OBR) defended the decision to release a letter that contradicted Treasury briefings to media.
David Miles, a member of the Budget Responsibility Committee (BRC), told MPs on the Treasury Select Committee that a letter showing that fiscal forecasts did not dramatically change after 31 October despite media reports suggesting otherwise was released to “set the record straight on the process”.
It comes after a report in Bloomberg on 13 November revealed government sources had pointed to an “improved fiscal forecast” as the reason behind scrapping plans for an income tax increase.
The Bloomberg report came after jitters raced through bond markets following a report in the Financial Times that revealed the axed income tax plans.
On Monday, Prime Minister Sir Keir Starmer delivered a speech attempting to dispel accusations that the government had lied about economic forecasts.
“It was inevitable we would always have to raise revenue,” Starmer said.
“There was no misleading.”