20 October 2022
If you are covering the departure of Liz Truss as Prime Minister and the market reaction, please find below a comment from Stuart Clark, portfolio manager at Quilter Investors:
“While Liz Truss’ resignation can draw a line under the unsettling policies, U-turns and shambolic operation of the latest government, there will, rightly so, be calls for a fresh election in order to validate the future direction of U.K. government policy.
“A rushed process to elect a new leader and proceed with the autumn statement will not allay concerns and anything short of a fresh mandate is unlikely to assuage international concerns about the stability of the U.K. government. This unfortunately will continue to act as a further headwind to unleashing the opportunities that exist within the economy and stock market. The UK equity market has been beaten up and could be considered attractive for investors at current valuations. However, with political risk becoming further embedded into the system, investors are going to have to wait before it becomes viable once again.
“One silver lining we are seeing is the gilt market and sterling reacting positively to Truss’ departure. This, coupled with the Deputy Governor of the Bank of England’s comment that the bank may not raise rates as high as the market expected, does provide a steadying feeling following the volatility of the last few weeks. However, fiscal policy is still very much up in the air, and with inflation continuing to ravage consumers’ incomes, the economic picture still looks challenging and will for some time, regardless of who sits in No.10.”
