Messrs Miliband and Balls could learn a thing or two from Eddie Mair, the BBC presenter who savaged Boris Johnson in a television interview on Sunday morning.
Britain’s economy is growing less than expected; borrowing remains sky high and ratings agency Fitch has the country on negative watch. Yet it seems as though the Coalition has emerged with some credit from last week’s budget.
Things may still be pretty gloomy but the Chancellor appears to have won a few friends in the City by putting business at the heart of his latest Budget as well as attempting to breathe life back into the troubled construction and housing markets.
However, economists I know tell me that the toxic combination of weaker growth and high public debt is likely to leave businesses and households facing painful tax rises after the next election. George Osborne also took the opportunity to change the remit of the Bank of England. BoE policymakers will finally be able to take a more flexible approach to inflation targeting allowing them to take into account broader economic stability and growth when making policy decisions.
My City sources suggest that more monetary stimulus may now be on the horizon. There is also a possibility that when Mark Carney becomes the Bank’s new Governor in July, the Monetary Policy Committee will consider providing guarantees that interest rates will remain fixed for set periods.
Elsewhere, the situation in Cyprus continues to pose a serious threat to eurozone stability following a relatively calm few months for the troubled region. My contacts, who have been monitoring developments closely, tell me that although Cyprus is too small to bring the euro down, the potential threat (as we have seen repeatedly over the life of the crisis) is contagion. The UK Budget is not expected to hit commodity markets – unfortunately we’re now too much of a backwater for that.
However, the spectre of a disgraceful confiscation of hard earned savings in Cyprus has been good for gold, which is back above $1,600 for the first time this month. There are now two dynamics pulling gold. The US dollar looks set to continue to rise, something which is usually negative for commodity prices.
This is especially true for gold and other precious metals. However, peripheral eurozone fears that savings could be expropriated by the government are likely to continue to provide a floor for the price. This is especially true as central banks continue to buy. Last year purchases by the so-called ‘official sector’ hit a 48-year high.
Despite these worries, the FTSE continues to be strong. Some, like Goldman Sachs, argue that because the pound is so weak the FTSE looks cheap from abroad. We shall see.
When people start to say it’s time to buy stocks, I tend to get a bit cautious but there definitely seems to be momentum behind these markets.
That’s all for now – don’t forget to vote in our new poll below. I for one will be very interested to hear your views. Perhaps there are even still some optimists left out there.
Until next time….
To give our clients a different and uniquely informed perspective on the financial markets, Capital Spreads introduces “The City Insider”, a fortnightly view from a City expert, with a senior network of influential bankers, investors, economists and analysts. The identity of the Insider is anonymous – and a closely guarded secret – in order to allow our expert to express forthright, personal views and to protect the identity of the City figures upon whose opinions the Insider draws.
by City Insider
How to Profit from Osborne’s Failure
Mar 26, 2013 at 12:24 pm in Market Commentary by City Insider
Messrs Miliband and Balls could learn a thing or two from Eddie Mair, the BBC presenter who savaged Boris Johnson in a television interview on Sunday morning.
Britain’s economy is growing less than expected; borrowing remains sky high and ratings agency Fitch has the country on negative watch. Yet it seems as though the Coalition has emerged with some credit from last week’s budget.
Things may still be pretty gloomy but the Chancellor appears to have won a few friends in the City by putting business at the heart of his latest Budget as well as attempting to breathe life back into the troubled construction and housing markets.
However, economists I know tell me that the toxic combination of weaker growth and high public debt is likely to leave businesses and households facing painful tax rises after the next election. George Osborne also took the opportunity to change the remit of the Bank of England. BoE policymakers will finally be able to take a more flexible approach to inflation targeting allowing them to take into account broader economic stability and growth when making policy decisions.
My City sources suggest that more monetary stimulus may now be on the horizon. There is also a possibility that when Mark Carney becomes the Bank’s new Governor in July, the Monetary Policy Committee will consider providing guarantees that interest rates will remain fixed for set periods.
Elsewhere, the situation in Cyprus continues to pose a serious threat to eurozone stability following a relatively calm few months for the troubled region. My contacts, who have been monitoring developments closely, tell me that although Cyprus is too small to bring the euro down, the potential threat (as we have seen repeatedly over the life of the crisis) is contagion. The UK Budget is not expected to hit commodity markets – unfortunately we’re now too much of a backwater for that.
However, the spectre of a disgraceful confiscation of hard earned savings in Cyprus has been good for gold, which is back above $1,600 for the first time this month. There are now two dynamics pulling gold. The US dollar looks set to continue to rise, something which is usually negative for commodity prices.
This is especially true for gold and other precious metals. However, peripheral eurozone fears that savings could be expropriated by the government are likely to continue to provide a floor for the price. This is especially true as central banks continue to buy. Last year purchases by the so-called ‘official sector’ hit a 48-year high.
Despite these worries, the FTSE continues to be strong. Some, like Goldman Sachs, argue that because the pound is so weak the FTSE looks cheap from abroad. We shall see.
When people start to say it’s time to buy stocks, I tend to get a bit cautious but there definitely seems to be momentum behind these markets.
That’s all for now – don’t forget to vote in our new poll below. I for one will be very interested to hear your views. Perhaps there are even still some optimists left out there.
Until next time….
To give our clients a different and uniquely informed perspective on the financial markets, Capital Spreads introduces “The City Insider”, a fortnightly view from a City expert, with a senior network of influential bankers, investors, economists and analysts. The identity of the Insider is anonymous – and a closely guarded secret – in order to allow our expert to express forthright, personal views and to protect the identity of the City figures upon whose opinions the Insider draws.