FINANCIAL and property market experts, recruitment bosses and business owners have slammed the Government for causing people to make financial or business decisions they may have avoided if they knew the true state of the public finances.
They say countless areas of (personal) finance and business were affected in the months and weeks running up to the Budget, from mortgages and savings to hiring.
They shared their views following a letter to Nikhil Rathi, the chief executive of the Financial Conduct Authority (FCA), by Shadow Chancellor Mel Stride, who has called for “a full investigation by the FCA into possible market abuse by all those who would have had access to confidential information including at HM Treasury, and 10 Downing Street”.
In his letter, Stride says that gilt markets were volatile throughout November, noting that, following the Chancellor’s pre-Budget speech on 4th November, there was an interest rate decision and that “investors, businesses and ordinary families will have taken decisions based on briefings from HM Treasury and public statements by ministers which we now know to have been misleading”.
Chancellor Rachel Reeves has denied she deceived the public.
People left out of pocket
Ken James, Director at London-based Contractor Mortgage Services, said the lack of transparency around the true state of the public finances could have been to the financial detriment of households and businesses alike: “People may feel they have been misled and many will be out of pocket. For countless ordinary families who made financial decisions throughout November, the consequences were immediate and costly.
“Permanent jobs and seasonal hires may not have been offered because businesses believed the economy was heading into turbulence that the OBR data now shows was overstated. Meanwhile, many mortgage borrowers rushed to fix deals in early in November, spooked by warnings of a looming fiscal crisis and afraid rates would spike again.”
Katy Eatenton, Mortgage & Protection Specialist at St Albans-based Lifetime Wealth Management agreed with James: “Property transactions have been paused, mortgages that perhaps could have been cheaper have been taken out, and people may have made financial decisions based on fiction rather than fact. All the smoke and mirrors, if it proves to be true, will be unforgivable.”
Justin Moy, Managing Director at Chelmsford-based EHF Mortgages, added: “The impact of misinformation and deceit by this government has adversely affected Swap markets and Gilt prices for the past few months, as the country braced itself for a tough budget.
“The multiple leaks of tax rises, black holes and austerity measures slowed the economy to a standstill, with homebuyers missing out on the opportunity to buy whilst they waited for news, as well as borrowers who were stuck on more expensive deals.
“The financial services industry is built on trust and honesty, which are the two pillars of advice given to consumers. These are two words not on this government’s agenda, unfortunately.”
Hiring put on hold
Meanwhile, David Morel, CEO at London-based Tiger Recruitment, said many businesses put hiring on hold and looked overseas: “The Mickey Mouse saga we have seen over the past month has eroded trust, put the brakes on hiring and incentivised businesses to divert their operations and their focus abroad where there is cheaper labour and more certain opportunities. The UK is in a cycle of budgetary doom for the foreseeable future unless changes are made rapidly.”
Equally withering was Sam Alsop-Hall, Chief Strategy Officer & Co-Founder at Birmingham-based Clive Henry Group, who said the consequences of a lack of financial transparency are not abstract but very real: “Markets respond to signals, not guesses, and if those signals were based on distorted numbers, investors and families were making decisions in good faith on a false foundation.
“Gilt volatility alone forces anyone managing cash, pensions or portfolios to move defensively. That costs real money. Savers may have fixed into financial products they didn’t need. Mortgage borrowers may have locked into higher rates because they were told the fiscal outlook was worse than it was. We saw the labour market stall instantly.
“Treasury briefings about “no fiscal headroom” made businesses pause hiring, freeze roles and delay expansion. People who should have been offered jobs simply were not. If the country actually had a surplus, the consequences aren’t abstract. They impact people’s finances, careers and major life choices.”
Kate Underwood, Founder & Chief People Strategist at Southampton-based Kate Underwood HR and Training, shared much the same view: “For small businesses, those calls made in November could easily be the difference between “we can grow next year” and “I am not sure we will still be here.” While Westminster plays politics, the rest of us are doing the maths on payroll, not performance in the chamber.”
Automate rather than hire people
Colette Mason, Author & AI Consultant at London-based Clever Clogs AI, said more firms may have turned to automation due to gloomy economic and financial forecasts: “Bosses look across rooms wondering which tasks, and worse – who – needs to go and be replaced by digital transformation. The Chancellor’s approach, which has ramped up the anger about the cost of labour via taxation and maintained the general economic gloom, has made the comparison between the cost of a person versus a software subscription starker.
“You can’t hide the stark labour cost in recommendations to change, and this has made the economic case for automating much stronger. This is the real-world consequence of political spin: a corrosive doubt that pushes businesses away from human labour and drives families into precarious financial positions.”
Tony Redondo, Founder at Newquay-based Cosmos Currency Exchange, cut straight to the chase: “Millions of borrowers and businesses made financial decisions in November based on potentially misleading information.”
Photo by engin akyurt on Unsplash
