- Monday, March 10, 2025
By: Shubham Ghosh
The stock and bond markets of the UK have seen a loss of at least $500 billion (£473 billion) in combined value since Liz Truss took over the prime minister earlier in September, Bloomberg reported, adding that investors’ confidence was rattled by a shock tax-slashing budget.
The new fiscal policies undertaken by the government of Truss, who defeated former chancellor Rishi Sunak in a hard-fought contest in the Conservative Party to succeed Boris Johnson who stepped down in July, have reportedly fuelled concerns that inflation and borrowing would surge when the interest rates are rapidly growing up.
The report said that a severe cross-asset selloff has been triggered and it sent the pound hitting a record low and intense discussions started over emergency action by the Bank of England.
Truss has taken over at a time when the UK economy is dealing with the specter of recession.
“Confidence in the UK has been sideswiped amid a pile-on of worries about the economic outlook and the direction of travel being taken by the Truss administration,” Susannah Streeter, senior analyst at Bristol-based Hargreaves Lansdown, was quoted by Bloomberg as saying.
“Only a U-turn in the slash-and-spend policies is likely to significantly restore optimism, but the administration is digging in its heels.”
The report added that FTSE 350 Index — which comprises stocks in the export-heavy FTSE 100, and the domestically focused FTSE 250 — has lost more than $300 billion (£284 billion) in market capitalisation since September 5, when Truss was confirmed as the leader of the ruling party.
“What the UK government has done is said, ‘to hell with the inflation outlook, let’s just think about growth’,” said Seema Shah, chief strategist at Principal Global Investors.
“Bond yields are only going to go higher and undo a lot of that positive economic movement from the tax cuts,“ she said in an interview.
“Far from being the safe pair of hands investors have been used to, the UK seems more like the wild west at the moment,” said Danni Hewson, a financial analyst at the UK’s AJ Bell told Bloomberg.
