OPINION27 January 2022

Lorna Tilbian: Clouds on the horizon

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Finance Financials Impact Opinion Public Sector Trends

Lorna Tilbian, chairman of Dowgate Capital and Impact columnist, talks about artificially propped up markets and what this could mean for the future.

storm clouds on the horizon

The spectre of rising inflation is spooking the markets. There is a prevailing view in the market that the only good news is bad news. In other words, fewer new jobs created and higher-than-expected unemployment numbers are good news for the markets, as policy-makers will hold off hiking interest rates and pulling back quantitative easing, which have artificially propped up markets for more than a decade. Of course, the long-term repercussions of ever rising debt are too dire to contemplate, but the cost of servicing the current debt pile with rising interest rates in the absence of inflation eating away some of the debt is equally problematic.

At the time of the global financial crisis in 2008, the UK government had £1tn of debt – which, by the time of the global pandemic, 12 years later, had risen to £1.8tn. It now stands at £2.2tn after Her Majesty’s Treasury spent £407bn trying to rescue our lives and livelihoods during the first 18 months of the pandemic.

Tax ...