3 Burst results for "Isabel Stockton"
Bloomberg Radio New York
"isabel stockton" Discussed on Bloomberg Radio New York
"19,000. That's a check on your markets at 90 minutes past the hour here in the UK Caroline. Our top story this morning, the pound hit a fresh record low against the dollar today before regaining some of those losses as the Chancellor doubled down on tax cut plans. The decline followed the release on Friday of quasi quantz growth plan, which detailed the biggest tax giveaway in half a century in the UK, asked about tax cuts over the weekend, quoting told the BBC there's more to come. There are growing fears that the Kremlin may soon ban some men from leaving Russia after president Putin's conscription plan sparked a mass exodus of citizens. People waited for hours in long lines, at land crossings into Finland, Kazakhstan and Georgia over the weekend, the Russian government has tried to reassure citizens saying that some students will be exempt small protests also broke out across the country. Meanwhile, in Italy, Georgia meloni is poised to lead the most right wing government in the country since World War II and become Italy's first female prime minister exit polls project a clear victory in yesterday's election, maloney's coalition will win about 43% of the vote according to rye, giving her a majority in the upper house, maloney has assured voters that she will keep the country's mammoth debt under control. Global newspapers a day on air and on Bloomberg quicktake powered by more than 2700 journalists and Alice in more than a 120 countries. I'm Caroline here good. This is Bloomberg Tom. It's remarkable isn't it normally the political risk here in Europe is focused on Italy and despite this significant historic change in the way that that country is going to be governed, the political risk is for acute here in the UK. UK markets looking besieged this morning guilt of plummeted, Sterling hit an all time low against the dollar as traders ramp up their bets on the pace and the size of interest rate hikes by the Bank of England. Now the institute of fiscal studies has been scathing about the Chancellor's announcements on Friday, gambling with fiscal sustainability in order to push through huge tax cuts as IFS director Paul Johnson put it. Joining us now Isabel Stockton research economist at the institute for fiscal studies, Isabel, we heard the Chancellor at doubling down on plans to further cut taxes over the weekend appearing to brush off the ravaging of these markets. How long can they keep this going, do you think? Well, as you said, it is a big gamble. So on current forecasts, these sums are not going to add up. And the Chancellor's plans would lead to that on an increasing share relative to the size of the economy. In the long run, that is not going to be sustainable. Now, the government may get lucky and we may be getting much better growth than current forecasts are expecting, or there may be a concerted policy effort across multiple policy areas that is successful in bringing growth up that would indeed be incredibly welcome. But cuts in headline tax rates on their own are just extremely unlikely to generate that sort of push to growth that we would need to make these tax cuts sustainable by themselves. Okay, so skeptical about the government's plan to increase growth via tax cards. What could the government do then to restore confidence? Do you think that they will you turn or will they soften some of these measures? I mean, there did seem to be no hint of that on Sunday with quasi quantang speaking to the media. And it certainly doesn't sound like it. We did hear some sort of encouraging noises during the statement in terms of looking at a broader range of areas, a broader range of reforms where we would need something we would need to see some policy action. We would need to see some investment to actually have a decent shot at generating the sort of growth we would need to put the public finances on a more sustainable path. Now, so far, that hasn't been terribly detailed, but we hope that that will follow and that tax cuts are just one part of a wider strategy, which is really all they can be. Isabel, what is the inflationary impact of Sterling and the pound at these levels? Well, of course, it is concerning to see this sort of market reaction to the fiscal statement and it is not clear that the tax cuts that we're seeing would not have an additional inflationary impact. Of course, that is a very plausible response. And it is worrying that we are seem to be headed in a direction where monitoring fiscal policy are sort of working against each other. Okay, just very briefly, do you think there'll be an emergency meeting by the Bank of England this week? Well, I wouldn't like to speculate on that. Okay. Isabel, thank you so much for being with us. Yeah, I appreciate if that was an off topic question, but I'm interesting to get your views though on the market reaction really unexpectedly perhaps severe market reaction to the budget announcements by quasi quarte Isabel Stockton is research economist at
Bloomberg Radio New York
"isabel stockton" Discussed on Bloomberg Radio New York
"Yeah, I mean, it's been pretty brutal, hasn't it? To be honest with you. And I think to be honest, it's quite surprising because much of what was in quieting budget had already been trailed. We knew about the CT cut, we knew about stamp duty. We knew he was toying with the idea of this basic rate cut to income tax. But I think the broader message Caroline used to sit it there with what the IFS has been talking about as well. I think it's just the tone that he came out with and the way it came across. The fact that there were no OBR forecasts, there was very little focus on fiscal sustainability. And it's just clearly really, really spooked the market and Thomas, you've mentioned that it's going to need something from both, I think, the Bank of England and the government to calm the market down. Well, we put that question to the former NPC Bank of England member Andrew sentenced just earlier this morning. He was pretty firm, he said he did not expect an emergency meeting from the Bank of England. He highlighted just how unusual that would be. Historically, will we hear from the Bank of England today or from the governor or some of the others? Or indeed from the government to try to soften the message? I think I wouldn't be as firm as that to say that won't be an emergency meeting, but I think it's a reasonable base case is that over the course of the next 24 48 hours you're going to, I think you're going to hear from the bank, Bailey's not scheduled to speak this week. I would expect him to come out and say something. I'd also expect something to come from the government as well. Because it's a two pronged approach. It's not just all you can't do something like this and expect the bank to come in and write to the rescue, the government needs to think seriously about those thought about what they want to do with tax. If they really want to cut taxes as they say they do, they need to think about spending because what worries people is borrowing. So it's the gap between the two. So they really need to think there's a fiscal strategy and what is the fiscal strategy we heard again from quoting over the weekend that's GDP going to be on a downward trajectory, but over what time horizon, when's that going to happen? And I think we've just really need to hear something on that front as well. And that's part of the critique, the Bloomberg economics critique of this of this policy mix. If we get a get a point and a markets, we touched on this pricing in a 150 basis points by the BOE by November, will debate whether that they're getting ahead of themselves on that. But clearly higher rates seem to be coming down the pipeline as consensus now. What is the drag on this economy from rates at the two year 4.4%, ten year comfort to be a 4% now? What does the economic pool of that kind of rate action from the BOE? Yeah, so it's a very give you a very, very rough guide. So every hundred basis points the bank increases interest rates. It knocks sort of .3 .4 of the level of GDP after about a year and maybe about .1 maybe .2 off the level of inflation. So it's not huge. But you have gone from the point at the beginning of this year where the idea of bank rate being at one one and a half percent was almost laughable. And now we're talking somewhere between sort of consensus economists is between four and 5% probably now. It's moving to that. The markets, you said Tom, between 5 and 6%. So you've had this massive repricing and to be honest, I think we might avoid or have a very shallow winter recession because of what the government's done through fiscal policy. I think the bigger risk now and the increasing risk is that recession hits in 2023 because the bank has had to pull so hard on the economy to bring inflation back into check. I wonder what you make of this debate, you know, the language around the UK being an emerging market than Larry summers, you know, talk about it, the UK submerging itself even further from there the pushback came from Gerard Lyon, who is also on the program on Friday and on just earlier this morning. He is both an economist and now an adviser to the prime minister, so really important voice. Sort of highly critical of U.S. economists and their view of Brexit Britain as it were. What do you make of this? I mean, I know it's only a phrase, but it's obviously one that's being attached to the UK increasingly emerging market currency. Well, selling is a high beat currency. We know that. And I think over the course of now, if you think back from 2008 to now, we've had at least two and we might be in the middle of a third enormous moves in Sterling. You head off to the financial crisis. You had about a 25% depreciation. You have Brexit, you had another ten, 15% depreciation. So we do get these big moves in the UK. And I think what worries people the most, it's that rate expectations are going up and they're going up aggressively, but it's just not providing any support for the pound and you're getting this negative correlation between Sterling and between rate differentials. And that is an emerging market dynamic. I don't think we're there yet. Definitely not. But it is a worrying sign. And the big worry, I think, the thing we haven't spoken about is this current account deficit we have in the UK as well. We rely as Mark Carney used to say on the kindness of strangers. So we've just got this reputation as being a serial borrower. And that's what spooks speak to the markets. As you say, markets pricing in a 150 basis points. And yet there is no guarantee that that would do enough to shore up the pound. And then you have to weigh up across that inflationary impact of a week about. Currently a one O 7 on Sterling, so as we touched on at the top, pairing some of the heavier losses at the start of the training session currently down 1%. Dan Hansen Bloomberg economic seen at UK economists. Thank you, as ever for the analysis. Yeah, so interesting. And perhaps that issue around can't account deficit is the thing that we can unpack next Isabel Stockton research economist said the institute for fiscal studies will be joining us about how Friday's mini budget can we still call it that will impact UK public finances and is impacting
Bloomberg Radio New York
"isabel stockton" Discussed on Bloomberg Radio New York
"The government in the Bank of England surely must be watching these markets as we see the pound down 1.6%, not as bad as the 4.7% drop that we saw earlier in Asian hours, but still we trade at one spot zero 6 8 three. Gilt yields on the ten year now above 4% for the first time since 2010 for 11. So we've jumped nearly 29 basis points in what an hour of trading. U.S. benchmark yields are up 8 basis points at three 77 U.S. stock futures are also in the red. There are global concerns, of course, because of the strong dollar because of rising global interest rates. Dollar spot index is up half of 1%. And worries around recession, which also see crude futures now down four tenths of 1% for WTI crew teaches $78 41. Those are the markets Tom. Well, as you touched on, it really is about UK assets today, particularly guilt and the pound and the pound hit a fresh record low against the U.S. dollar. Earlier today, before pairing some of those heavier losses as the Chancellor doubled down on tax cut plans, speaking to the BBC yesterday, the Chancellor reemphasized his fiscal strategy. And there's more to come, we've only been here in 19 days. I want to see over the next year. People retain more of that income because I believe that it's a British people that are going to drive this economy. And I want that's why I want people to retain more of the income that they earn. Quite times bullish comments came after markets on Friday delivered a damning verdict on his plan for the biggest tax giveaway in half a century. If the route continues this week, the currency risks moving beyond a short term embarrassment for the government into a more profound crisis that could force a rapid policy response. Well, on Friday, quoting scrapped the top level of income tax and cut the basic rate by a percentage point, which also reversed an increase in the national insurance payroll tax that was brought in earlier this year, but labor's leader Keir Starmer says it is the wrong set of policies for the country. Do not think that the choice to have tax cuts for those that are earning hundreds of thousands of pounds is the right choice when our economy is struggling the way it is. That was Keir Starmer. He was speaking to the BBC at the start of the Labor Party conference in Liverpool, he will give his keynote speech to party members there on Tuesday. The new Chancellor's tax cutting spree puts increasing pressure on the Bank of England governor Andrew Bailey to hike rates. Speaking to Bloomberg after the policies were announced, former US Treasury secretary Larry summers said the government has created the circumstances for the pound to sink below parity. There's nothing in the pattern of market response in the UK that suggests anything but fear rather than confidence in the policy approaches being taken. It would not surprise me if the pound eventually gets below a dollar if the current policy pays is maintained. Some is also saying in that interview that quote, the UK is behaving a bit like an emerging market turning it some felt itself into a submerging market. Economists at JPMorgan Chase and Citigroup now expect the Bank of England to lift rates by 75 basis points at its meeting on November 3rd, traders meanwhile pricing in a 150 basis points from the Bank of England by November. Okay, so that on the UK, meanwhile, European politics, Georgia maloney is poised to lead Italy's most right-wing government since World War II and become the nation's first female prime minister, exit polls project a clear victory in yesterday's election, maloney told supporters that she would govern for everyone. If we will be called to govern this country, we will do it for all Italians for everybody with the goal of uniting this people of stressing what unites rather than what divides. Speaking through a translator, her coalition will win about 43% of the vote according to rye, giving maloney a majority in the upper house, she has assured voters in Italy that she will keep the nation's mammoth debt under control. Here in the UK, the housing market appears to be shaking off the impact of a cost of living crisis and higher borrowing costs. That's as home sellers are boosting the prices they're asking for their properties at the strongest pace in four months, Bloomberg's puja conjure reports. Right move says buyer demand is 20% higher than before the pandemic. The property website added that prices rose 0.7% this month after a 1.3% drop in August, the report also highlighted that half prices surged 2.1% in the last month, housing has remained a bright spot in the economy, growing despite the recession that came with COVID-19 lockdowns and could be boosted further after the stamp duty cut in Friday's budget, the lack of supply is likely to support the market through a recession. In London, I'm puja condia, Bloomberg daybreak Europe. Okay, so those are our top stories for you this morning. Well, we're going to dive into the UK Sterling and guilt story in a moment with a Bloomberg senior UK economist Dan Hansen, but I also want to mention a few of the other people that we're going to be speaking to this morning Isabel Stockton from the institute for fiscal studies. Absolutely damning on kwa Tang's budget. They call it a budget. And frustrated, really, that the OBR, the office of budget responsibility wasn't given an opportunity to weigh in, the independent sort of government watchdog, so we'll be speaking to them at 9 20 a.m., also we will be hearing from Lizzie Burton, who's been speaking to labor's Rachel Reeves, the shadow Chancellor up in Liverpool. She's been doing that interview in the last few minutes, so we'll bring that to you a bit later on. Yeah, the opposition Labor Party that we're ahead in the polls, but they're also under pressure to sharpen their message to kind of cut through with voters now that whether the markets like it or not, the Tories certainly have a clear message whether that's something that appeals to you or not, and the question then for laborers can they home a similar opposing message to kind of convince voters. Let's get back to what's happening then across these UK assets, particularly guilt and the pound. And Sterling slumping to an all time low against the U.S. dollar after the government's tax and spending announcement on Friday bets on dollar parity are rising. As our bets on Bank of England rate increases with money markets pricing in, as much as a 150 basis points of increases by the next policy meeting in November, joining us now is Dan Hansen, Bloomberg, economics, senior UK economist Stan, just give us your take your analysis and the market moves that we've seen over the last 24 hours