Rishi Sunak’s ‘first job’ may start Tory ‘civil war’ says Peston
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The UK economy has made significant strides toward recovery as the risk of bankruptcy has fallen below that of France. As former Chancellor Rishi Sunak becomes Prime Minister it has been suggested that the markets will forgive the mini-budget fiasco and treat the new Tory leader as a fresh start.
Credit default swaps measuring the likelihood of sovereign bankruptcy five years ahead have dropped dramatically to 33.92 and are even lower than they were during the COVID-19 pandemic.
However, in France, the equivalent credit default swaps reached a peak of 34.31 on Monday.
According to the latest PMI survey of manufacturing and services by S&P Global, President Emmanuel Macron’s nation is now on the brink of recession.
Germany is also falling victim to similar economic woes as the energy crisis causes chaos for industry and manufacturing.
Credit default swaps have risen to 29 in Belgium, 66 in Spain and Portugal, 165 in Italy, and Greece at 195, according to The Telegraph.
This contradicts previous economic forecasts that compared the situation in the UK to that in Italy and Greece.
The Telegraph’s World Economy Editor Ambrose Evans-Pritchard wrote: “If Mr Sunak can maintain party cohesion and deliver a few months of political calm, global investors are likely to treat the Truss episode as an aberration.
“They will increasingly turn their attention to other countries in trouble or with unstable governments.”
President Macron is facing his own political dramas as his party has lost its majority in Parliament and like much of Europe his country is facing the prospect of energy blackouts this winter.
Hedge fund activist Guy Hands had claimed that the UK will need to be bailed out by the International Monetary Fund (IMF), however, Mr Evans-Pritchard claimed this now “stretches credulity”.
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He added: “The storm over the mini-Budget may ultimately fade into perspective, much as the collapse of Northern Rock in 2007 was at first seen as a unique British fiasco, before Europe was hit with its own dramatic meltdown a year later.
“Ultimately, it was the eurozone that suffered greater economic damage over the following eight years.
“We now know that Northern Rock was just the first tremor of a global earthquake that was already building up.”
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