"What we are witnessing is the early stage of a dangerous chain reaction. A spike in oil and gas prices is directly influencing inflation expectations, and the bond markets are responding rapidly."
"Under Liz Truss, it was a credibility shock triggered by fiscal decisions. Today, it's an external shock originating from energy markets. However, the outcome is similar, with investors demanding higher yields, which in turn raises borrowing costs across the entire economy."
"An overreliance on imported gas makes it particularly susceptible to external shocks, highlighting the UK's structural vulnerabilities in the face of rising energy prices."
UK government bonds are facing a significant decline, with yields surpassing levels not seen since the crisis that led to Liz Truss's ousting. This situation raises concerns about an energy-driven crisis affecting the government and households. Nigel Green, CEO of deVere Group, warns of a dangerous chain reaction due to rising oil and gas prices influencing inflation expectations. UK 10-year gilt yields have exceeded 5%, and over £100 billion has been lost in market value. The UK's reliance on imported gas contributes to its structural vulnerability.
Read at London Business News | Londonlovesbusiness.com
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