Home Headlines Risk of UK balance of payments crisis under Truss is rising, Deutsche Bank warns
Our website publishes news, press releases, opinion and advertorials on various financial organizations, products and services which are commissioned from various Companies, Organizations, PR agencies, Bloggers etc. These commissioned articles are commercial in nature. This is not to be considered as financial advice and should be considered only for information purposes. It does not reflect the views or opinion of our website and is not to be considered an endorsement or a recommendation. We cannot guarantee the accuracy or applicability of any information provided with respect to your individual or personal circumstances. Please seek Professional advice from a qualified professional before making any financial decisions. We link to various third-party websites, affiliate sales networks, and to our advertising partners websites. When you view or click on certain links available on our articles, our partners may compensate us for displaying the content to you or make a purchase or fill a form. This will not incur any additional charges to you. To make things simpler for you to identity or distinguish advertised or sponsored articles or links, you may consider all articles or links hosted on our site as a commercial article placement. We will not be responsible for any loss you may suffer as a result of any omission or inaccuracy on the website.

Risk of UK balance of payments crisis under Truss is rising, Deutsche Bank warns

by uma

LONDON (Reuters) – The risk of a UK balance of payment crisis “should not be underestimated” under a Liz Truss government, Deutsche Bank warned on Monday, citing the potential for large unfunded fiscal expansion and changes to the Bank of England mandate to damage investor confidence.

“A large, unfunded and untargeted fiscal expansion accompanied by potential changes to the BoE’s mandate could lead to an even bigger rise in inflation expectations and – at the extreme – the emergence of fiscal dominance,” said Deutsche Bank’s FX analyst Shreyas Gopal in a research note published shortly after Truss won the Conservative Party leadership vote.

“With the global macro backdrop so uncertain, investor confidence cannot be taken for granted,” Gopal wrote. “The risk premium on UK gilts is already rising, coincident with unusually large foreign outflows. If investor confidence erodes further, this dynamic could become a self-fulfilling balance of payments crisis whereby foreigners would refuse to fund the UK external deficit.”

 

(Reporting by Tommy Reggiori Wilkes; editing by Dhara Ranasinghe)

 

You may also like

This website uses cookies to improve your experience. We'll assume you're ok with this, but you can opt-out if you wish. Accept Read More