Bank of England warns markets are underestimating inflation risks – as it happened

Andrew Bailey fears markets are downplaying risks of persistent inflation, as new figures show UK borrowing so far this year is 16.9bn less than expected

• Far too early' to propose UK interest rate cuts, says Bank of England governor

Today's public borrowing figures do give Jeremy Hunt some potential wiggle room' to cut taxes tomorrow, says Victoria Scholar, head of investment at interactive investor, as borrowing this financial year is 16.9bn below forecast.

Although borrowing in October was only 3bn less than in October 2020 at the height of the pandemic when billions were being spent on expensive programmes such as the furlough scheme, the government's finances are in a much better position than the OBR had predicted earlier this year. This potentially provides some wiggle room for the Chancellor Jeremy Hunt when he makes his announcements tomorrow.

So far, the government has been trying to stick with fiscal prudence, refraining from tax cuts and spending increases in order to provide a fiscal backdrop that supports that Bank of England's monetary tightening path designed to tame inflation.

Last week we met the prime minister's pledge to halve inflation, the economy is in a very different place to where we were a year ago, and we can now focus on going for growth, pushing up the growth rate of the economy, and cutting taxes for individuals.