{"id":1670983,"date":"2022-10-04T01:50:13","date_gmt":"2022-10-04T05:50:13","guid":{"rendered":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/?p=1670983"},"modified":"2022-10-04T01:50:42","modified_gmt":"2022-10-04T05:50:42","slug":"analysis-uk-bond-market-crash-takes-shine-off-big-bang-plans-for-london","status":"publish","type":"post","link":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/analysis-uk-bond-market-crash-takes-shine-off-big-bang-plans-for-london\/","title":{"rendered":"Analysis-UK bond market crash takes shine off Big Bang plans for London"},"content":{"rendered":"<aside class=\"mashsb-container mashsb-main mashsb-stretched\"><div class=\"mashsb-box\"><div class=\"mashsb-count mash-medium\" style=\"&quot;\"><div class=\"counts mashsbcount\">24<\/div><span class=\"mashsb-sharetext\">SHARES<\/span><\/div><div class=\"mashsb-buttons\"><a class=\"mashicon-facebook mash-medium mash-nomargin mashsb-noshadow\" href=\"https:\/\/www.facebook.com\/sharer.php?u=https%3A%2F%2Fwww.conservativenewsdaily.net%2Fbreaking-news%2Fanalysis-uk-bond-market-crash-takes-shine-off-big-bang-plans-for-london%2F\" target=\"_top\" rel=\"nofollow\"><span class=\"icon\"><\/span><span class=\"text\">Facebook<\/span><\/a><a class=\"mashicon-twitter mash-medium mash-nomargin mashsb-noshadow\" href=\"https:\/\/twitter.com\/intent\/tweet?text=&amp;url=https:\/\/www.conservativenewsdaily.net\/breaking-news\/?p=1670983&amp;via=ConservNewsDly\" target=\"_top\" rel=\"nofollow\"><span class=\"icon\"><\/span><span class=\"text\">Twitter<\/span><\/a><a class=\"mashicon-subscribe mash-medium mash-nomargin mashsb-noshadow\" href=\"#\" target=\"_top\" rel=\"nofollow\"><span class=\"icon\"><\/span><span class=\"text\">Subscribe<\/span><\/a><div class=\"onoffswitch2 mash-medium mashsb-noshadow\" style=\"display:none\"><\/div><\/div>\n            <\/div>\n                <div style=\"clear:both\"><\/div><\/aside>\n            <!-- Share buttons by mashshare.net - Version: 4.0.47--><p>By Huw Jones<\/p>\n<p>LONDON (Reuters) \u2013     Britain\u2019s new Prime Minister Liz Truss promised to \u201cunshackle\u201d the City of London to fuel growth, but crashing the bond market over tax cuts will take the shine off her \u201cBig Bang\u201d plan for financial services.<\/p>\n<div id=\"div-gpt-ad-1663871513696-art-1\">\n<\/div>\n<p>Markets took fright last month when UK finance minister Kwasi Kwarteng unveiled plans to increase borrowing to fund lower taxes, sending government bond yields rocketing and the pound plunging to a record low against the dollar.<\/p>\n<p>In a rare move, the Bank of England was forced to buy unlimited gilts to restore calm and avert what some have called a near \u201cLehman moment\u201d in UK government bonds, casting a pall over the City of London financial district.<\/p>\n<p>\u201cMarkets are all about confidence, and if you lose that confidence, which we are in serious danger of doing, then we have to show that fiscal sustainability is part of the plan,\u201d said Alasdair Haynes, chief executive of Aquis Stock Exchange.<\/p>\n<p>Amid a cost of living crisis and opposition from some of the government\u2019s own lawmakers, Kwarteng ditched one element of the tax-cutting plan on Monday, representing about 2 billion pounds  ($2.3 billion).<\/p>\n<p>Analysts said it made little difference to the overall scale of borrowing, and that a more sustainable fix was needed before the Bank of England stops propping up gilts in mid-October. Kwarteng now plans to bring forward publication of his fiscal plan to later this month, the Financial Times and a government source said late on Monday.<\/p>\n<p>City officials have welcomed Truss\u2019 new found warmth towards the sector after years of being left out in the cold following Brexit. They also hailed her appetite for bold action on the economy, but within limits to avoid fallout on the financial sector.<\/p>\n<p>\u201cThat\u2019s fine if you\u2019re doing it within parameters that people are comfortable with and expect, but don\u2019t lose your moorings from the institutions that allow you to be reasonably radical without consequences to it,\u201d said Miles Celic, chief executive of TheCityUK, which promotes Britain\u2019s financial sector abroad.<\/p>\n<p>\u201cThe UK has been a bit of a minefield the last couple weeks,\u201d Ken Griffin, billionaire founder of Citadel Securities, one of the world\u2019s biggest market-making firms, told an investment conference last week.<\/p>\n<p>\u201cIt represents the first time we\u2019ve seen a major developed market, in a very long time, lose confidence from investors.\u201d<\/p>\n<p>SOFT STRENGTHS<\/p>\n<p>Britain\u2019s 261 billion pound financial sector is one of its biggest industries, with a trade surplus of around 90 billion pounds, meaning much is at stake.<\/p>\n<p>Its reputation for robust, predictable and credible institutional frameworks has been a bedrock of the City\u2019s international reach, but they have been missing over the past week or so, said William Wright, CEO of think tank New Financial.<\/p>\n<p>\u201cOne has to be pretty bold to make an investment decision in the UK right now,\u201d Wright said.<\/p>\n<p>Unpredictability in UK policymaking risks denting the impact of Kwarteng\u2019s moves due this month to make financial rules friendlier, Wright added.<\/p>\n<p>The sector was already on the back foot before the bond market crash, with banks, insurers and asset managers forced to spend millions of pounds opening hubs in the European Union to avoid disruption to business after Brexit.<\/p>\n<p>Initial regulatory reforms such as easing listing rules have yet to bear any major fruit after Amsterdam overtook London to become Europe\u2019s top share trading hub.<\/p>\n<p>\u201cThe real issue for me is that if asset prices decline and sterling remains incredibly low, then UK plc is for sale because the Americans can come in and buy basically what they want. Why  would you put your company here in the UK knowing they become vulnerable?\u201d Haynes asked.<\/p>\n<p>Bill Campbell, global bond portfolio manager at DoubleLine, said the Bank of England\u2019s credibility was also on the line.<\/p>\n<p>\u201cWe have further reduced our UK exposure, as we are trying to get a better sense on the trajectory of policy and if it makes sense,\u201d Campbell said.<\/p>\n<p>REGULATING REALITY<\/p>\n<p>Even before the bond market crash there were concerns among some in the financial sector over how Truss and Kwarteng were planning a 1980s-style \u201cBig Bang\u201d of deregulation, starting with scrapping a cap on banker bonuses inherited from the EU.<\/p>\n<p>There is already an extensive bill before parliament to update existing financial rules, ease insurance capital requirements and begin regulating new sectors like stablecoins.<\/p>\n<p>The City of London Corporation, which runs the \u201cSquare Mile\u201d financial district, said a government focus on financial services competitiveness would support Britain\u2019s economic revival.<\/p>\n<p>But Truss\u2019 promise to scrap all remaining EU rules by the end of 2023 has raised some concerns given the existing rulebook is largely based on tested international norms which Britain was key in shaping, and that radical change brings costs for banks.<\/p>\n<p>\u201cAny approach to regulatory change will need to recognise that reality,\u201d TheCityUK\u2019s Celic said.<\/p>\n<p>A review of financial watchdogs and the Bank of England\u2019s mandate promised by Truss, also raised concerns about political interference in regulators, whose independence is long seen as one of the City\u2019s international strengths.<\/p>\n<p>Kwarteng has rolled back to some extent, telling financiers last week he would not tinker with the current structure of regulators \u2013 quelling talk of a merger of watchdogs for now \u2013 and saying on Monday he had never \u201crubbished\u201d the central bank.<\/p>\n<p>($1 = 0.8968 pounds)<\/p>\n<p> (Additional reporting by Caroline Madl and Davide Barbuscia in New York; Editing by Mark Potter)<\/p>\n<p><a href=\"https:\/\/www.oann.com\/uncategorized\/analysis-uk-bond-market-crash\/attachment\/file-photo-people-walk-through-the-city-of-london-financial\/\"><img decoding=\"async\" src=\"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-content\/uploads\/2022\/10\/tagreuters.com2022binary_LYNXMPEI9307T-BASEIMAGE.jpg\" alt=\"tagreuters.com2022binary_LYNXMPEI9307T-BASEIMAGE\" \/><\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<p>By Huw Jones LONDON (Reuters) \u2013 Britain\u2019s new Prime Minister Liz Truss promised to \u201cunshackle\u201d the City of London to fuel growth, but crashing the bond market over tax cuts<\/p>\n","protected":false},"author":66,"featured_media":2315279,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_mo_disable_npp":"","fifu_image_url":"","fifu_image_alt":"","footnotes":""},"categories":[],"tags":[],"class_list":["post-1670983","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry"],"_links":{"self":[{"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/posts\/1670983","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/users\/66"}],"replies":[{"embeddable":true,"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/comments?post=1670983"}],"version-history":[{"count":0,"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/posts\/1670983\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/media\/2315279"}],"wp:attachment":[{"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/media?parent=1670983"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/categories?post=1670983"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/tags?post=1670983"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}