In this BBC Markets interview, Alpesh B Patel, CEO of Profinium Partners, analyses how a potential Andy Burnham administration could affect UK financial markets. He explains that investors focus on bond market reactions, as higher borrowing costs would increase debt servicing and reduce growth. Patel argues that political credibility is crucial; borrowing for growth will not be trusted by bond markets. He highlights that current inflation is driven by supply‑side shocks, notably rising oil prices, and that raising rates cannot solve structural price pressures. Fiscal discipline—sticking to fiscal rules and avoiding excessive borrowing—is presented as the safest path. Patel also discusses the importance of consumer and business confidence, noting that a stable prime ministership could boost “animal spirits,” with the FTSE 100 near all‑time highs and opportunities in AI and inward investment. Overall, he advises politicians to be quiet, bullish, or at least boring, to keep markets calm and enable growth.
Chapters
Alpesh B Patel, who's the CEO of Profinium Partners. Alpesh, good to have you with us. And let's start first of all with what investors are looking at as far as Andy Burnham is concerned, particularly here in the UK, trying to get any indication about what economic policy may come out of a government if he indeed forms one.
Bond deals, that's what matters. I know it's not sexy, it's not interesting, but really it's, uh, you're— the view you're looking at is could this spike the cost of borrowing for the UK government, which is what bond deals signify? Because if it does, it means more more money is going to go to paying UK debt because we run the country at a loss, basically. So foreigners are going to be— who are lending us the money are going to be getting more in interest payments and less in UK growth. Now, at the moment, it hasn't happened. There is some talk that, oh, if you borrow for growth, the bond market or the bond vigilantes will be forgiving, which is absolute nonsense because the problem is the politicians don't have credibility. It's one thing to borrow, but saying you're borrowing for growth doesn't mean the market believes you. The market's quite shrewd because it's the one lending you the money. So at the moment, things are fine. After this speech, there's been no jitters yet. But then again, he's not prime minister yet.
Yeah. And a lot of focus will be on who he might choose as his finance minister or his chancellor. I suppose the point, though, is they'll still inherit the same problems that the current chancellor has right now, not only domestically, but if we look at the bigger international picture, things like rising energy prices, seeing that once again, oil prices back on the up.
It's the things you can't control. And, you know, raising interest rates when you've got structural problems like oil prices doesn't help because inflation is not coming from excess demand. From what we can see, it's actually coming from the supply side shocks instead. So there are things that the government simply can't do. The best thing that he can do at the moment is just sound boring and say, I'm going to stick to fiscal rules. I will— I will not borrow too much. I won't borrow for growth because Liz Truss tried that.. And despite what Jim O'Neill said, that you'll be okay, the bond markets will be forgiving, we realized at that point you get a spike in bond yields and then mortgages go up. Consumers have got less money to spend on stuff on the high street.
And there's an interesting assessment really of current Chancellor Rachel Reeves and whether maybe when the current Labour government came into power under Prime Minister Keir Starmer, they were a bit too pessimistic. They were talking about the amount of money that the country didn't have, and that might have been part of the problem. And I guess, you know, even under a new Andy Burnham government, that consumer confidence issue remains a problem that the UK maybe talked itself into a spiral.
I think the best thing that a new prime minister brings, you might think it's instability, but I think it brings the stability of knowing that we're probably not going to change PMs again before the next election. But he can talk things up with a new energy, which is why they want him. Now, that could be good for talking up the country and building those animal spirits amongst business and building consumer confidence. You're absolutely right on that. The FTSE 100 is almost at all-time highs. Now, that gives some indication that the UK has got a great niche in that it's not the US, it's not tech volatility. It is actually a diversifier away from that. So we do have a lot of things to be positive about, let alone artificial intelligence on our growth and inward investment from the rest of the world over here. And you're absolutely right, we want to see more of that so we build up that consumer confidence and business investment confidence and stability. Most of the time, best thing that politicians do are either keep quiet or be bullish. And as long as they do one of those two things, I would probably— a third thing, be boring as well— then the markets are happy and we as consumers and businesses can get on with the business of spending, which is what will lead to growth ultimately and productivity gains. Yeah.
Yeah. Let's see how this plays out. Alpesh, for now, thank you. Talk to you soon. Alpesh B Patel there at Profinium Partners. Thank you.
