As we expected, markets largely shrugged off the heightened political uncertainty of the last month, suggesting that a hung parliament outcome to the general election was already priced in. Instead, the sharp drop in global market confidence and pick-up in volatility in the wake of the Greek sovereign debt crisis proved to be the dominant influence on UK markets. Meanwhile, markets continued to revise down their expectations for official interest rates, suggesting that they have become increasingly concerned (and rightly, in our view) that the UK’s recovery will lose momentum when the ‘Great Squeeze’ begins.
Become a client to read more
This is premium content that requires an active Capital Economics subscription to view.
Already have an account?
You may already have access to this premium content as part of a paid subscription.
Sign in to read the content in full or get details of how you can access it
Register for free
Sign up for a free account to gain:
- Unlock additional content
- Register for Capital Economics events
- Receive email updates and economist-curated newsletters
- Request a free trial of our services