The UK government’s humiliating turnaround on higher rate reforms will not be enough to calm turbulent financial markets, warns the CEO of one of the world’s largest financial advisory, asset management and fintech organizations.
The warning by deVere Group’s Nigel Green comes as Chancellor Kwasi Kwarteng is reported to be planning to bring forward his medium-term fiscal plan announcement to this month.
The deVere CEO says: “The anticipation of Mr. Kwarteng for this month instead of November 23 underscores how poorly the so-called mini-budget has been received by financial markets.
“Making the announcement sooner rather than later is the right thing to do, as the longer markets wait for proof that the government’s fiscal agenda is sound, the greater the risk of turmoil.
“However, the anticipation of the announcement and the cancellation of plans to cut the 45p tax rate smacks of desperation.”
He continues: “The forthcoming amendments to the reckless mini-budget that we already know are not likely to calm the markets in any significant way.
“The pound has regained some ground against the dollar and gold yields have fallen on the cancellation of the 45p rate announcement, but the pound will remain under pressure and high bond yields remain a serious concern.
“Investor confidence in UK plc has had a hole in it.”
Last week, Nigel Green noted that markets now know where the weakness lies. He added: “If they don’t move, they will have blown up the UK mortgage market, UK pensions and so on, and eventually this could spill over to impact the wider global financial markets, which are sitting on thin ice. as liquidity disappears. ”
“Prime Minister Liz Truss and her Chancellor Kwasi Kwarteng created a cycle of destruction.
He concludes: “There will be some relief that the UK government finally seems to be listening a little.
“However, the modified plans do not go far enough to ease markets and restore economic confidence.”