Markets give Burnham a cautious welcome

 
Lale Akoner, global market strategist for etoro, says:“Markets have delivered their first verdict on Andy Burnham which is cautious optimism. Investors appear comfortable with the idea of a more active government, but only if it can deliver faster economic growth without stretching the public finances. That explains why gilt yields rose after Burnham spoke about using “flexibility” within the fiscal rules. Markets are willing to finance investment, but they want to know it will generate a return.

“For retail investors, the Budget matters more than today’s political headlines. A credible plan to invest in infrastructure, housing and productivity could support UK-focused companies, banks and construction firms, while a stronger pound would help ease imported inflation. But if borrowing rises without convincing markets that growth will follow, higher gilt yields could keep mortgage rates and business borrowing costs elevated. The opportunity for investors lies in whether Burnham can convince markets that more spending today will create a stronger economy tomorrow, rather than simply a bigger bill for taxpayers.”