Opinion  

Britain cannot endure another botched Budget

Simoney Kyriakou

Simoney Kyriakou

By close of play on Friday 23 September, it was clear in which direction the UK was heading. 

Brian Tora, consultant at wealth managers JM Finn, had this to say: "Our own stock market hardly greeted the news with enthusiasm. With markets weak on the other side of the Atlantic, shares had already been drifting lower, but the initial reaction to this so-called fiscal event was an accelerated fall as sellers gained the ascendency.

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"There is little doubt that the new administration is gambling on economic growth being propelled higher, but one consequence could be further upward pressure on inflation."

It may have been ballsy in intention but the fiscal statement seems to have been a balls-up in execution. Right now that gamble on higher economic growth has not paid off. Not at all.

After a few days in hiding – maybe in former prime minister Boris Johnson's fridge – Truss took to the radio to do series back-to-back interviews on September 28. She insisted she would not change course on the economy. She said it was to stave off a recession.

Markets did not believe her. The sell-off in sterling resumed.

What happens to us is going to affect a heck of a lot of other countries, such is globalisation.

As Tora commented: "Realistically we have a great deal to digest, following recent pronouncements. Investors, already nervous that recessionary times are unlikely to be avoided in the short term, seem set to remain in a cautious mood."

Cautious is one word for it.

It's not the word many advisers are hearing from their clients right now. But again, those words are too rude for this article. Go to Twitter. 

Nigel Green, deVere Group's chief executive, and many of whose clients are British expats whose pensions have been hammered by the drop in sterling, said: "Liz Truss and her chancellor Kwasi Kwarteng have created a loop of doom."

Goodness only knows what we will see on November 23 when chancellor Kwasi Kwarteng makes his next statement. I've worked through 22 spring Budgets and almost as many Autumn statements, and I am dreading what he might do. 

Will the government break their triple-lock pledge to pensioners? Likely.

Will they find a way to dip into people's pension pots at the same time as removing some tax caps? HMRC just published data showing it took in more than £382mn in charges for pots in excess of the lifetime allowance. Will the government maintain the freeze until 2026 or risk losing the economy money by removing it altogether?

Whatever they decide to do, they have two months to work out the economic impact of their actions, because I cannot see how Britain can endure another balls-up of a Budget.