UK Market Freefall - All ill-Advised Fiscal Package Backfires

We expected a new prime minister and chancellor would herald policy change, but few expected the U.K. government to gamble so aggressively on unfunded tax cuts to boost economic growth. The response in financial markets has been vicious, with large declines in the pound and U.K. government bonds. The gamble has seemingly been lost already and the only question remaining is how quickly and forcefully the Bank of England will respond. We continue to advocate caution toward U.K. assets until that question is answered.