Thursday, October 16, 2025
  • Login
Euro Times
No Result
View All Result
  • Home
  • Finance
  • Business
  • World
  • Politics
  • Markets
  • Stock Market
  • Cryptocurrency
  • Investing
  • Health
  • Technology
  • Home
  • Finance
  • Business
  • World
  • Politics
  • Markets
  • Stock Market
  • Cryptocurrency
  • Investing
  • Health
  • Technology
Euro Times
No Result
View All Result

Britain’s sudden lurch to ‘Reaganomics’ gets a thumbs down from the markets

by Stocks News Feed
September 24, 2022
in Markets
Reading Time: 4 mins read
A A
0
Home Markets
Share on FacebookShare on Twitter


Truss has now put the country on an economic road completely at odds with most, if not all, major global economies.

Hannah Mckay | Reuters

LONDON — New U.K. Prime Minister Liz Truss may have talked big on “trickle-down economics” during her campaign trail this summer, but no-one could have predicted the swathe of tax cuts unleashed just weeks into her Downing Street tenure.

Billed as a “mini-budget” by her Finance Minister Kwasi Kwarteng, Friday’s fiscal announcement was anything but with a volume of tax cuts not seen in Britain since 1972.

Truss — whose “Trussonomics” policy stance has been likened to that of her political idols Ronald Reagan and Margaret Thatcher — has now put the country on an economic road completely at odds with most, if not all, major global economies as inflation boils over and a cost-of-living crisis barrels into Europe.

It’s been seen, even by some of her advocates, as a political and economic gamble with Truss yet to face the wider British electorate in a nationwide vote — unlike her predecessor Boris Johnson.

Market players immediately predicted that Britain would have to scale up its bond issuance and significantly increase its debt load to pay for the cuts — not typical of the low-tax Conservative governments of the past.

Britain’s sudden lurch to ‘Reaganomics’ gets a thumbs down from the markets

U.K. bond markets went into a tailspin Friday as investors shunned the country’s assets. Yields (which move inversely to prices) on the 5-year gilt rose by half a percentage point — which Reuters reported was the largest one-day rise since at least 1991.

And with bonds tanking, sterling was also sent into freefall after hitting 37-year lows against the dollar in recent weeks. It ended Friday down nearly 3.6% against the greenback. On the week it lost 5% and is now down 27% since just before the 2016 Brexit vote.

Wall Street banks are now seriously considering a break lower to parity with the U.S. dollar — for the first time in history — and many commentators have likened the pound to an emergency market currency.

Left-leaning The Guardian newspaper called it “a budget for the rich” on its front page Saturday, while The Times called it a “great tax gamble.” The right-wing Daily Mail newspaper called it a “true Tory budget” while Kwarteng himself said it was a “very good day for the U.K.,” declining to comment on the currency moves.

ING analysts said in a research note that investors are worried that the U.K. Treasury has now effectively committed to open-ended borrowing for these tax cuts, and that the Bank of England will have to respond with more aggressive rate hikes.

“To us, the magnitude of the jump in gilt yields has more to do with a market that has become dysfunctional,” ING’s Senior Rates Strategist Antoine Bouvet and Global Head of Markets Chris Turner said in the note.

UK taxpayers will have to fund a new oil price cap, says Neuberger Berman's Jonathan Bailey

“A number of indicators … suggest that liquidity is drying up and market functioning is impaired. A signal from the BOE that it is willing to suspend gilt sales would go a long way to restoring market confidence, especially if it wants to maximise its chances of fighting inflation with conventional tools like interest rate hikes. The QT [quantitative tightening] battle, in short, is not one worth fighting for the BOE,” they added, referencing the Bank’s move to normalize its balance sheet after years of stimulus.

ING also noted that the U.K.’s long-term sovereign outlook is currently stable with the big three ratings agencies, but the “risk of a possible shift to a negative outlook” could come when they are reviewed (Oct. 21 and Dec. 9).

Deutsche Bank analysts said, meanwhile, that the “price of easy fiscal policy was laid bare by the market” on Friday.

“[Friday’s] market moves suggest that there may be a credibility gap,” Sanjay Raja, a senior economist at Deutsche Bank, said in a research note.

“A plan to get the public finances on a sustainable footing will be necessary but not sufficient for markets to regain confidence in an economy sporting large twin deficits [the U.K.’s fiscal and current account balances],” he added.

“Crucially, with fiscal policy shifting into easier territory, the onus may now fall on the Bank of England to stabilise the economy, with the MPC [Monetary Policy Committee] having more work to do to plug the gap between expansionary fiscal policy and tightening monetary policy.”

—CNBC’s Karen Gilchrist contributed to this article.



Source link

Tags: BritainslurchMarketsReaganomicsSuddenthumbs
Previous Post

Bitcoin was almost named Netcoin by Satoshi Nakamoto, hints domain data By Cointelegraph

Next Post

Links 9/24/22 | naked capitalism

Related Posts

STAAR Surgical holders should vote against sale to Alcon, ISS says (update) (STAA:NASDAQ)

STAAR Surgical holders should vote against sale to Alcon, ISS says (update) (STAA:NASDAQ)

by Joshua Fineman
October 15, 2025
0

designer491/iStock by way of Getty PhotosReplace 3:20pm: Provides additional particulars from ISS advice.STAAR Surgical (NASDAQ:STAA) holders ought to vote in...

What to look for when Hasbro (HAS) reports Q3 2025 earnings results

What to look for when Hasbro (HAS) reports Q3 2025 earnings results

by Staff Correspondent
October 14, 2025
0

Shares of Hasbro, Inc. (NASDAQ: HAS) have been up over 1% on Tuesday. The inventory has gained 31% year-to-date. The...

Citigroup earnings Q3 2025

Citigroup earnings Q3 2025

by Yun Li
October 15, 2025
0

Citi is seen on the ground of the New York Inventory Trade on March 3, 2025. NYSECitigroup posted stronger-than-expected third-quarter earnings...

Bessent tells the FT that struggling China wants ‘to pull everybody else down with them’

Bessent tells the FT that struggling China wants ‘to pull everybody else down with them’

by Jeff Cox
October 15, 2025
0

U.S. Treasury Secretary Scott Bessent speaks to the press, on the day of U.S.-China talks on commerce, financial and nationwide...

Goldman Sachs (GS) earnings Q3 2025

Goldman Sachs (GS) earnings Q3 2025

by Hugh Son
October 14, 2025
0

David Solomon, CEO Goldman Sachs, talking on CNBC's Squawk Field on April twenty second, 2025. CNBCGoldman Sachs is scheduled to...

China’s Next Industrial Revolution Is Out of This World

China’s Next Industrial Revolution Is Out of This World

by Ian King
October 14, 2025
0

After I was rising up within the Eighties, China’s factories have been principally identified for churning out low cost garments...

Next Post
Links 9/24/22 | naked capitalism

Links 9/24/22 | naked capitalism

Best cloud gaming services 2022: Reviewed and ranked

Best cloud gaming services 2022: Reviewed and ranked

Miller Deep Value Strategy Q3 2025 Letter (NYSEARCA:MVPA)

Miller Deep Value Strategy Q3 2025 Letter (NYSEARCA:MVPA)

October 16, 2025
A week after floods, swathes of central Mexico reel from devastation

A week after floods, swathes of central Mexico reel from devastation

October 16, 2025
Every new feature for Pixel phones in Android 16 QPR2 Beta 3

Every new feature for Pixel phones in Android 16 QPR2 Beta 3

October 15, 2025
STAAR Surgical holders should vote against sale to Alcon, ISS says (update) (STAA:NASDAQ)

STAAR Surgical holders should vote against sale to Alcon, ISS says (update) (STAA:NASDAQ)

October 15, 2025
Possible Delivery of Tomahawks to Ukraine to Damage Russia-US Normalization

Possible Delivery of Tomahawks to Ukraine to Damage Russia-US Normalization

October 15, 2025
Trump Trio of Vought, Miller, and Eric Rise From the Muck

Trump Trio of Vought, Miller, and Eric Rise From the Muck

October 15, 2025
Euro Times

Get the latest news and follow the coverage of Business & Financial News, Stock Market Updates, Analysis, and more from the trusted sources.

CATEGORIES

  • Business
  • Cryptocurrency
  • Finance
  • Health
  • Investing
  • Markets
  • Politics
  • Stock Market
  • Technology
  • Uncategorized
  • World

LATEST UPDATES

Miller Deep Value Strategy Q3 2025 Letter (NYSEARCA:MVPA)

A week after floods, swathes of central Mexico reel from devastation

  • Disclaimer
  • Privacy Policy
  • DMCA
  • Cookie Privacy Policy
  • Terms and Conditions
  • Contact us

Copyright © 2022 - Euro Times.
Euro Times is not responsible for the content of external sites.

No Result
View All Result
  • Home
  • Finance
  • Business
  • World
  • Politics
  • Markets
  • Stock Market
  • Cryptocurrency
  • Investing
  • Health
  • Technology

Copyright © 2022 - Euro Times.
Euro Times is not responsible for the content of external sites.

Welcome Back!

Login to your account below

Forgotten Password?

Retrieve your password

Please enter your username or email address to reset your password.

Log In