Following this morning’s volatility in the markets, financial services experts have commented.
Wes Wilkes, CEO at wealth managers IronMarket: “The Chancellor and PM are exacerbating a self-inflicted problem and are displaying breathtaking arrogance and intransigence in front of extreme market turmoil. During the PM’s interview on Thursday morning, bond yields rose by around 4.5% and we saw a sharp sell-off in UK equities. This volatility will continue unless the momentous policy error that was the mini-Budget is reversed or watered down. We have a PM acting like a bull in a china shop while the Bank of England follows behind her picking up the broken bits to try and salvage some credibility in our currency and economy. We have a rate rise to come next week, too. Strap in and strap in tight.”
Adrian Kidd, chartered wealth manager at Aylesbury-based EQ Financial Planning: “Although Wednesday’s intervention by Threadneedle Street brought some respite, I can see further pressure from markets and the rally in Sterling will allow speculators to re-short the pound. The only way for this to be resolved is for a U-turn or postponement of the policies introduced in the mini-Budget. With too much self-interest at the top table, that seems unlikely but it would show true leadership and is what markets really need to regain lost faith in the UK. The Government messed up by not having the OBR provide independent costings and rushing through these measures. Hence, we have panic and a Soros-like speculation and frenzy across UK assets. The result is an independent central bank bailing out the fiscal measures of a fragile Government, by resuming QE and stopping QT. The result will likely be rates being raised by a minimum of 1.5% next month, if not sooner. No wonder the world has shunned the Pound and gilts. If the Bank of England and the Government were running a BP or Tesco, they’d be sacked already. The fall-out from this is much more far-reaching that how many Dollars we can get for our Pound. It’s starting to hit everybody.”
Samuel Mather-Holgate of Swindon-based advisory firm, Mather & Murray Financial: “There’s a gloomy familiarity to waking up to the Pound and stockmarket on the slide. On Thursday, this happened while Truss was on the airwaves trying to justify putting out the largest non-budget ever that didn’t accompany a financial statement and projections about how long and how much the Chancellor will be borrowing. Waiting until the end of November for a further budget and projections from the OBR is simply not a sustainable position for the government. We need this much quicker, and there is no justification for the delay. Truss said she urgently needed to stimulate economic growth. Causing mayhem in the financial markets and pushing up inflation with tax cuts and higher borrowing costs was certainly not the way to go about it.”
Adam Walkom, Co-founder at London-based Permanent Wealth Partners: “The Pound is not the issue. We have a free-floating exchange rate, which is moving around as it should. This is not 1992, and the currency does not need to be defended against anything. Attempting to do so will only make things worse as it implies panic. The real issue is the U.K government bond market and the solvency of pension funds. This is what prompted the action by the Bank of England on Wednesday. The bond market determines what it costs the U.K government to borrow, and frankly if they can borrow at all. James Carville, a former aide to Bill Clinton, was absolutely correct in 1994 when he said he wished he could be reincarnated as the bond market, because then you can intimidate everybody.”
Rob Gill, managing director at mortgage broker Altura Mortgage Finance: “The big concern for the property market is what happens if the new normal for mortgage rates is a rapid increase of 2%-3% on current levels. This could cause a ‘buyers strike’ as perspective purchasers are unwilling or unable to take out the mortgage they need at the newly elevated rates.”
Rhys Schofield, managing director at Derbyshire-based mortgage advisors Peak Money: “It’s extremely worrying to have Liz Truss doing the rounds this morning saying, “I have to do what I believe is right for the country and what is going to help move our country forward”, regardless of the chaos in the markets and what the experts are telling her. To quote Albert Einstein, insanity is doing the same thing over and over and expecting different results. Right now, the lunatics are running the asylum.”
Graham Cox, director of Bristol-based Self Employed Mortgage Hub: “The sheer scale of incompetence on display from Truss and Kwarteng is astounding. In under a week, they’ve managed to prolong the recession, increase inflation prospects and raise everyone’s mortgage costs. Andrew Bailey and the Bank of England have hardly fared any better. It was only last month they were telling us the recession wouldn’t start until the final quarter of this year. Last week they suddenly announced that, sure enough, we are already in recession, something anyone with half a brain could have told them. How are we supposed to have any confidence in these people?”