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MARKET REVIEW :
The impact of the September 2022 UK mini-budget
In late 2022 , after a chaotic period of upheaval , conservative leader Liz Truss took on the conservative leadership for a short-lived couple of weeks . Between 6 September and 25 October 2022 ( the shortest premiership in British history ), she and her chancellor Kwasi Kwarteng introduced a poorly thought-through mini-budget designed to stimulate the economy , but which in fact sent the markets into freefall .
As traders struggled to price in the impact , gilt prices spiralled – collapsing by an estimated 20 %
Following the market chaos created this year by the UK mini-budget and ensuing fixed income chaos , which saw gilt prices go into free-fall and serious concerns arise around the safety of UK pensions and long-term investments , WESLEY BRAY explores the impact .
in two months and creating unprecedented and unexpected chaos across the long-term investment industry and creating very real fears about the viability and health of the UK ' s pensions industry , as well as casting its mortgage markets , government and corporate borrowing costs into disarray .
A key issue was the lack of preparation or awareness on the part of the authorities and regulators , with the opacity of some areas of the gilts market leading to a misunderstanding of the potential consequences . The UK ’ s Financial Conduct Authority admitted , during a hearing of the House of Lords ’ industry and regulators committee , to being unprepared for the impact of the mini-budget , saying the issue had not been “ right at the top of the radar ”.
A perfect storm Speaking to The TRADE , Dominic Holland , head of UK sales at LedgerEdge , described the period as a “ perfect storm ”.
“ We had the Bank of England moving rates on the Thursday and then the mini-budget on the Friday . It has been well documented that aspects of the minibudget were more of a pro-growth strategy rather than looking at the cost-of-living crisis or other sort
64 // TheTRADE // Q4 2022