Market Overview|Quilter Cheviot

Truss wins race for UK PM

Market overview from Quilter Cheviot

By Alan McIntosh, Chief Investment Strategist

Liz Truss has been sworn in as Britain’s new prime minister after comfortably beating Rishi Sunak, securing 57% of the leadership contest vote among Conservative party members. There was a fairly muted market reaction to the news, perhaps partly because Truss has been a clear frontrunner in recent weeks.

One of the first priorities for the former foreign secretary will be tackling surging energy prices, with average household bills set to rise from almost £2000 to over £3,500 in October. Truss also faces a stuttering economy and industrial unrest with the Bank of England warning that the UK will fall into recession this year.

Since Boris Johnson resigned in early July there has been a significant weakening in sterling and UK government bond markets. While part of this can be attributed to broader macroeconomic themes, there is also some suggestion that the selling is partly due to the Truss’s promise of unfunded tax cuts and unorthodox regulatory views including the proposed altering of the Bank of England’s inflation mandate.

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