2022 has seen a period of increased volatility worldwide. Investors are focused on central banks raising rates, with markets already factoring in a 75-basis point hike by the U.S. Federal Reserve. The latest Consumer Price Index report showed inflation rising faster than expected, and while conversely the equity markets are staging a small rally, many major US names that are often seen as safe havens, including the likes of Netflix, Tesla, Apple and Meta, are down 30%-60% from 52-week highs.
Within this global backdrop, the UK has suffered extreme volatility in the wake of the resignation of Prime Minister Boris Johnson in July.
It started with an idea formed from basic assumptions by the new leader of the UK Government, Liz Truss, and her new chancellor, Kwasi Kwarteng; Cutting tax would lead to increased consumer spending, boosting growth and counter slowing activity and rising inflation. Plus, lower taxes tend to increase the government’s tax receipts longer-term, rather than reduce them.
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