The new UK Premier has 5 days – tops – to establish her new government and put in place the strategies and policies to restore confidence in the UK economy. If not, the Virtuous Sovereign Trinity will fracture. It needs sound communication and clear grasp of the problems behind the crisis. Truss hasn’t demonstrated either – yet.
The last thing new UK premier Liz Truss will try to do is fix the NHS. Too difficult and an electoral minefield. It will get worse. But, tech and medical advances plus a bit of flair could give us a new NHS fit for purpose and ready for the next century. It will take will and imagination – which is unlikely to be found in the Department of Health or No 10.
The UK is at risk of breaking its “Virtuous Sovereign Trinity” of stable politics, currency and bond markets. Collapsing confidence in politics to stem the slide in sterling and thus Gilts, could see the UK stumble into a crippling Sovereign Financial crisis sooner than we think possible.
The outlook for the UK looks increasingly grim. There are few reasons to hope a new government can reverse the mounting consumer fears, stagflation and the growing sense of decline.
The pace of US CPI inflation moderated slightly, but it’s too early for the market to conclude rate hikes are over. There are many imbalances still to resolve – especially in consumer credit. Meanwhile, the new UK premier’s clumsy attempts to blame the BOE raise questions.
There are lots of outlooks and scenarios on the inflation threat: what if its longer and turns stagflationary, and just how much more destabilising would the fraxious global economy become?