Investors might be forgiven for being a little concerned about UK banks, following the now infamous mini budget from Kwasi Kwarteng, the country’s chancellor.
Sweeping tax cuts funded by borrowing, in the face of rampant inflation, caused sterling to crash in late September. UK borrowing costs soared – and the pension, mortgage and housing markets were paralysed.
UK banks’ share prices consequently fell so much that their implied cost of equity rose to 19%, according to Berenberg.
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