23 September 2022
If you are covering the mini-budget and how it might impact the economy, please see the following comment from Paul Craig, portfolio manager at Quilter:
"Well, you certainly have to commend the new chancellor for having the courage of conviction on his first day in school, but whether government’s energy subsidies, tax cuts, etc. will pre-empt economic growth or prove inflationary will largely depend on how these incentives are financed. The Bank of England (BoE) is likely to provide at least part of this funding, implying a first-round boost to broad money. This could prove inflationary and therefore require offsetting BoE action, and for consumers with borrowings they could simply loose from one hand that they receive in the other. That said, monetary growth may be offset by planned BoE quantitative tightening, a slowdown in mortgage lending and external outflows (expanding balance of payments deficit).
"A sensible approach would be for the BoE to wait to assess the monetary consequences before deciding whether fiscal plans require a policy response.
"As for whether these fiscal policies culminate to stimulate economic growth and/or prove ‘Pro-business’ we will have to wait and see as consumers and corporates may simply bank the savings rather than spend/invest amid the global economic uncertainty."
