Barclays boss insists Budget has been a ‘success’ despite gloomy forecasts
The chief executive of Barclays has said Rachel Reeves’s tax-raising Budget has been a “success” so far, arguing it will likely boost economic growth in the longer term despite a raft of gloomy forecasts.
Speaking at the Financial Times’ Global Banking Summit on Tuesday, CS “Venkat” Venkatakrishnan said markets for government debt suggested the Autumn Statement had been well-received by investors so far.
“If you take one simple measure of success, the 10-year gilt this morning was something like 4.22, 4.23 per cent – that’s what it was a week before the budget,” Venkat said. “So on that little note, at this point in time, it’s been a success.
“Now, practically, you’ve got to judge this over a much longer period,” he added. “You’ve got to judge it over a three to five year period.”
The comments from one of Britain’s most powerful bankers offer the government some respite amid a barrage of criticism over the Budget, which triggered an immediate selloff in UK bonds for which Barclays is a market maker.
Chancellor Rachel Reeves said she raised taxes by £41bn and raised borrowing by £142bn to fill a “black hole” in the UK’s public finances and position the economy for growth.
Economists have offered gloomy projections on the Budget’s short-term impact, only providing a temporary uplift to GDP while keeping inflation and interest rates higher for longer.
Venkat argued: “If you judge it in its entirety, which is ‘was it a budget aimed at growth?’ Yes. Is growth necessary? Yes. Did it try to achieve a reasonable balance between investment, spending on services, and taxation and borrowing? I think so.”
However, he cautioned that its impact would be felt “differently on different parts of the economy,” acknowledging warnings from businesses that the hike in employers’ national insurance contributions will lead to price hikes and job losses.
“But the answer to all of that is growth,” Venkat said. “If we get growth back into the country, above a one per cent level, then the businesses that are affected today will feel happier about their circumstances tomorrow… and I think that’s a reasonable bet.”
Separately, Natwest CEO Paul Thwaite told the same event that while the government had made “tough choices”, its focus on planning, infrastructure, science, technology and housing should “support a good economy in the medium term”.
“Generally, if you take a step back, sentiment is better, growth is muted but there is growth and we have all the advantage that London has naturally… as good place to do business,” Thwaite said.
“So I’m reasonably optimistic about the outcome, but I’m taking a three, five, seven-year view, rather than a six-month view.”