Autumn Statement : Allspring Global Investments’ Eddie Cheng shares his reaction

by | Nov 17, 2022

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Eddie Cheng, head of International Portfolio Management for the Systematic Edge Multi-Asset team at Allspring Global Investments, shares his thinking on the key points of today’s Autumn Statement with IFA Magazine commenting:

“We will face into the storm,” declared the UK Chancellor, with various tax rises and government spending cuts at the centre of today’s Autumn Budget announcements. The government’s plan of driving more than £50 billion of savings aims to install stability of UK’s public finances and recover credibility of the Conservative government.

While the financial discipline might help the government to avoid another immediate market storm as experienced after the Kwarteng mini-budget, there are some sobering numbers and key questions to consider:

  • The UK appears likely to stay in recession in the year ahead. Recession risks are typically mitigated by either loosening monetary policy or stimulating fiscal policy. However, the path the UK is heading to appears to be exactly the opposite, with higher interest rate and deeper spending cuts. This may deepen and prolong the UK’s recession and hurt its competitiveness.


  • Lower growth potential and economic weakness could indicate a significant headwind for sterling. A weaker currency may further complicate the Chancellor and the Bank of England’s quest to rein in inflation.
  • Many of the spending cut measures are factored into the future, so we will need to see how markets digest this information over time.

The current government seems to avoid using the terminology “austerity”, perhaps in order to disassociate itself with the hugely unpopular austerity policy introduced by the coalition government back in 2010. With UK debt to GDP lower than that of the US, there could be room for the government to be softer in its current plan. However, finding the balance between allowing growth to recover soon and installing enough financial discipline to recover the confidence of financial markets will be a hard trade-off to make.

About Eddie Cheng

Eddie Cheng is the head of International Portfolio Management for the Systematic Edge Multi-Asset team at Allspring Global Investments.

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