September 5th became a turning point in the history of the United Kingdom. On that day, Liz Truss took office as the country’s new prime minister. Various events and reports are now associated with this particular day, including the one on financial markets. If it was just an ordinary day, the report would have stated that the British stock market had lost $500 billion since September 5th. Instead, it says that the UK stock and bond markets tumbled by $500 billion in combined value when Liz Truss became prime minister.
Since then, the FTSE 350 index, the main indicator of the overall health of the UK economy on the London Stock Exchange, has plummeted by over $300 billion in market capitalization. The UK Government Bond Index has lost more than $173 billion for the reporting period. In addition, sterling-denominated high-grade corporate bonds have fallen by $29 billion. The plunge came due to the new fiscal policy announced by Liz Truss. British investors fear a further increase in inflation and public debt, which are bound to accelerate after the Bank of England’s monetary tightening. In fact, the confidence of local investors decreased noticeably.
Overall, the year 2022 has been challenging for the UK economy. The country has faced a structural crisis amid record inflation in decades as well as a slowdown in business activity. Moreover, energy prices surged to unprecedented levels. The UK government is now planning to ensure that GDP grows steadily by 2.5% per year.
