Financial News: U.K. government feared bond-market meltdown from COVID-19 lockdown, Cummings says

The UK government was scared the bond markets could turn against them if they went into a coronavirus lockdown, the prime minister’s former adviser Dominic Cummings told MPs.

The central bank was also nervous around the impact such restrictions to contain the virus would have on the public finances, Cummings claimed.

“It was the case that the Bank of England, senior officials in the Treasury, senior officials in the Cabinet Office were saying, ‘We have to think about the consequences of, if we do this lockdown, we are going to have to borrow huge amounts of money,” Cummings told MPs on the Science and Technology Committee on 26 May.

“What if the bond markets suddenly spike and go crazy and refuse to lend to us? We’re going then to have to find emergency powers to tell the Bank of England to buy the debt,” he said.

Cummings, however, praised chancellor Rishi Sunak’s response to the crisis and said stories that Sunak had argued against enacting the first lockdown in March in order to protect the economy were untrue.

Sunak was “extremely competent”, and “all of those stories are wrong,” Cummings said.

In contrast, Cummings savaged secretary of state for health Matt Hancock, who he accused of lying and said should have been removed from his position.

“The secretary of state for health should have been fired for at least 15-20 things, including lying to everybody on multiple occasions in meeting after meeting in the Cabinet room and publicly,” Cummings said.

This story originally appeared on FNLondon.com

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May 26, 2021 at 11:41PM
James Booth
http://www.marketwatch.com/news/story.asp?guid=%7B20C05575-04D4-B545-7453-EF4EDC0A373D%7D&siteid=rss&rss=1