ALEX BRUMMER: Britain’s banks will find it hard to escape the eruptions across the rest of the financial universe

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Fortunately, the chancellor was temporarily isolated from the volatile world of markets while he presented his budget.

By restoring the UK’s reputation for fiscal literacy after last year’s failed Trouss-Kwarteng experiment, Jeremy Hunt has been able to make progress towards his key goal of getting inactive citizens back to work.

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If the American financial channel CNBC had been working in the background, it might not have been able to return two-thirds of the fiscal profit accumulated since November 2022 so quickly.

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Warning Signs: Hedge funds and traders are often far ahead of the authorities in identifying weak links in the financial chain.

Hunt, along with colleagues at the Bank of England, urged HSBC to keep Silicon Valley Bank’s UK arm for the tech industry.

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But the UK, as a major financial center, will have a hard time avoiding explosions in the rest of the banking universe.

Hedge funds and traders are often far ahead of the authorities in identifying weak links in the financial chain.

The alarming 20% ​​drop in the value of Credit Suisse shares shows how quickly contagion can move from non-essential institutions like the SVB to the main ones.

In the last quarter of last year, depositors withdrew £120 billion from Credit Suisse. Since then, there has been little to encourage the funds to return.

The bank’s largest investor, Harris Associates, sold its stake. The publication of bank accounts was delayed by US authorities.

And the Saudi Arabian investor shows little interest in being a lender of last resort.

In the final days of Fred Goodwin’s Royal Bank of Scotland, the disgraced chief executive toured the city in 2008 urging investors to support a £20bn rights issue.

Shares were expected, but that didn’t stop the owner of NatWest from asking the government for a bailout after Lehman.

Amid much controversy, the US Treasury and the Federal Reserve wasted no time installing a safety net within the US banking system over the weekend to ease the panic.

This is despite promises made after the great financial crisis that no bank is too big to fail.

The Swiss National Bank now has to intervene. It will either offer liquidity, or it could even facilitate a bearish merger with UBS.

The inaction hurt other European banks. BNP and other continental lenders are wary of Credit Suisse deals at the first sign of a credit crunch.

Uncertainty caused a nasty decline in European stock markets, with the bank-heavy FTSE 100 index down 3.8%.

Shares of regional banks in the US are faltering, and major US stock indexes are falling sharply.

If there is a positive side, it is that the market’s appetite for further interest rate hikes on both sides of the Atlantic is waning. It makes no sense to accumulate agony when lenders refuse to lend to technology and real estate for fear of rising defaults.

fatal loop

The big surprise in the budget is the speed at which economic forecasts have changed.

This, together with the freezing of personal tax thresholds, gave the Chancellor some financial space to try something else.

If there is a lesson to be learned, it is that there is too much trust in official forecasts.

After negative growth forecasts from the Bank of England and the Fiscal Responsibility Office last year and the IMF this year, opposition politicians couldn’t wait to blast the country with contempt.

They contributed to the fatal loop. However, there is clear evidence – crowded airports, queues at restaurants, overflowing shopping bags and store openings – to suggest otherwise.

It takes a lot of effort to throw staunch British consumers and firms off course.

The latest YouGov/Cebr consumer and business confidence survey shows rising optimism in almost every category, including home prices and job insecurity.

All of this could go down the drain if banks refuse to lend to each other or, worse, customers.

Luckily, for now, the doomsters are losing.

nuclear spring

Britain has a nasty habit of letting others use our winning technology.

The chancellor deserves credit for recognizing the promise of Rolls-Royce small modular reactors after almost a decade of skepticism and delays.

Under Great British Nuclear, the government is committed to funding exciting new technology. About the time!

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