Billionaire investor slams UK government
His policies could exacerbate inflation in the country and lead to ballooning public debt, warns prominent investor Ray Dalio
The new British cabinet operates like the government of an emerging country, billionaire investor and founder of Bridgewater Associates Ray Dalio wrote on Twitter on Tuesday.
He criticized Britain’s new spending plan for its aggressive tax cuts that could raise the nation’s debts to unsustainable levels and cripple the pound.
« Investors and Policymakers: Heed the Lesson of the UK’s Budget Mistake » Dalio wrote in a tweet. “The panic selling you are seeing now leading to the fall in UK bonds, currencies and financial assets is due to the recognition that the large supply of debt which will have to be sold by the government is far too large for the demand. .”
According to Dalio, the rapid increase in debt, coupled with the lack of demand for sterling on the world stage, is a recipe for disaster.
“It makes people want to get out of debt and out of the currency. I cannot understand that those who were behind this movement did not understand this. It suggests incompetence. Dalio wrote. « Mechanically, the British government operates like the government of an emerging country, it produces too much debt in a currency for which there is not a great global demand », he added.
Last week, British Prime Minister Liz Truss and Chancellor of the Exchequer Kwasi Kwarteng unveiled a new spending plan, designed to boost the country’s economic growth and help mitigate the effects of soaring energy prices. short term. Following the announcement, the pound fell to a record low against the US dollar on Monday, as the UK bond market saw the biggest one-day selloff in its history.
READ MORE: The pound falls to an all-time low
According to Deutsche Bank, the new spending plan will take the UK’s debt-to-GDP ratio to around 101%, the highest level of debt the country has held since 1962.
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