Hope and glory: Why the UK is a publicly traded company Hope and glory: Why the UK is a publicly traded company Hope and glory: Why the UK is a publicly traded company

Hope and glory: Why the UK is a publicly traded company

Charles White-Thomson

CEO, Saxo Markets UK

Summary:  It became clear in 2022 that the United Kingdom is effectively a publicly traded company, or plc, with all the ups and downs this brings, including active and influential shareholders - or to be more accurate, bondholders.

The opinions of these bondholders, otherwise known as ‘gilts', matters, and they have significant leverage.

This was seen more generally during the short-lived Truss/Kwarteng government, and more precisely following their September Mini Budget, where the bond, equity and currency markets began to collapse under selling pressure in face of huge negativity triggered by the potential of unfunded tax cuts and more widespread credibility concerns.

The message was simple: with public debt of £2.5trn, the actions of the United Kingdom matter, especially if you want to come back for more financing and maintain stability in the financial markets. The treatment was decisively harsh and waived any niceties that may historically have been applied when dealing with one of the largest global economies. 

As lenders to the UK plc, these bondholders arguably have different priorities compared to the general stakeholders.

They are looking for relative stability, especially with the currency and inflation, with smooth coupon payments and at maturity. 

This is somewhat different compared to the broader stakeholders, including UK equity owners, who will also be looking at the smooth execution of the UK business plan with the ability to ‘grow' and outperform other geographical opportunities. 

The nuance is important, especially if the government or C-suite becomes overly focused on stability and the status quo, or the wishes of their bondholders, at the expense of growth and the general stakeholders who are footing the bill for this ‘stability' via ever-growing tax demands.

As with many things, this is about achieving balance.

For now, Chancellor Jeremy Hunt and Prime Minister Rishi Sunak, CFO and CEO respectively, have received many plaudits for the steadying influence they have delivered, and the broader financial markets have responded positively for the time being. 

But looking ahead, it is difficult to build a sustained business case for UK plc if the approach is purely stability, cost cutting and raising taxes. This seems like a sure route to a managed decline and all the difficulties that brings. 

The old adage when analysing publicly traded companies is that it is difficult to ‘cut your way to glory', with the cut referring to only reducing costs, and this applies here.

Finding balance

This brings us to the argument around the growth part of the Truss/Kwarteng Mini Budget.

The message around growth and reducing the tax burden became lost in the overall furore of the unfunded tax cuts, the debate around 'Trussonomics' and the spectacularly poor delivery of the message.

For the UK to deliver on its full potential, it is important to maintain a balance between growth and stability.

The growth strategy has to be clearly articulated in an effective manner with a focus on the drivers that deliver maximum returns including the bravery to review and if necessary, tackle ‘sacred cows'.

Equity holders, in the general sense of the world, will be rightly suspicious of tinkering to grab headlines.

Halfway measures have the risk of planting the UK in ‘no man's land' - neither a growth nor value play with limited leverage over the bondholders who effectively have the dominant hand.

This is about bold moves and a big numbers game, anything else will get lost in the main driver of managing the debt burden which includes further borrowing.

The demographic picture for the UK is also a key element for policy holders to continue to focus on.

An ageing population narrows the strategic options, and it is important that the younger generation sense and experience the upside that was enjoyed by their forebears.

This growth should be structural and more than just stimulus led with the boom and busts that come with this.

In time, this will be linked to the already discussed theme of bold and considered plans and the ability to openly debate options including the ‘sacred cows'.

This article has discussed glory with reference to the difficulties of ‘cutting your way to glory' and now we include hope, an all-important characteristic of growing and vibrant economies.

In the absence of these bold and considered plans, the UK will be a good client of the ever dominant bond market but will squander the most compelling part - the growth story and the vitally important associated upside.

Charles White-Thomson is CEO of Saxo UK.


The Saxo Bank Group entities each provide execution-only service and access to Analysis permitting a person to view and/or use content available on or via the website. This content is not intended to and does not change or expand on the execution-only service. Such access and use are at all times subject to (i) The Terms of Use; (ii) Full Disclaimer; (iii) The Risk Warning; (iv) the Rules of Engagement and (v) Notices applying to Saxo News & Research and/or its content in addition (where relevant) to the terms governing the use of hyperlinks on the website of a member of the Saxo Bank Group by which access to Saxo News & Research is gained. Such content is therefore provided as no more than information. In particular no advice is intended to be provided or to be relied on as provided nor endorsed by any Saxo Bank Group entity; nor is it to be construed as solicitation or an incentive provided to subscribe for or sell or purchase any financial instrument. All trading or investments you make must be pursuant to your own unprompted and informed self-directed decision. As such no Saxo Bank Group entity will have or be liable for any losses that you may sustain as a result of any investment decision made in reliance on information which is available on Saxo News & Research or as a result of the use of the Saxo News & Research. Orders given and trades effected are deemed intended to be given or effected for the account of the customer with the Saxo Bank Group entity operating in the jurisdiction in which the customer resides and/or with whom the customer opened and maintains his/her trading account. Saxo News & Research does not contain (and should not be construed as containing) financial, investment, tax or trading advice or advice of any sort offered, recommended or endorsed by Saxo Bank Group and should not be construed as a record of our trading prices, or as an offer, incentive or solicitation for the subscription, sale or purchase in any financial instrument. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, would be considered as a marketing communication under relevant laws.

Please read our disclaimers:
- Notification on Non-Independent Investment Research (https://www.home.saxo/legal/niird/notification)
- Full disclaimer (https://www.home.saxo/en-gb/legal/disclaimer/saxo-disclaimer)

Saxo Markets
40 Bank Street, 26th floor
E14 5DA
United Kingdom

Contact Saxo

Select region

United Kingdom
United Kingdom

Trade Responsibly
All trading carries risk. To help you understand the risks involved we have put together a series of Key Information Documents (KIDs) highlighting the risks and rewards related to each product. Read more
Additional Key Information Documents are available in our trading platform.

Saxo Markets is a registered Trading Name of Saxo Capital Markets UK Ltd (‘SCML’). SCML is authorised and regulated by the Financial Conduct Authority, Firm Reference Number 551422. Registered address: 26th Floor, 40 Bank Street, Canary Wharf, London E14 5DA. Company number 7413871. Registered in England & Wales.

This website, including the information and materials contained in it, are not directed at, or intended for distribution to or use by, any person or entity who is a citizen or resident of or located in the United States, Belgium or any other jurisdiction where such distribution, publication, availability or use would be contrary to applicable law or regulation.

It is important that you understand that with investments, your capital is at risk. Past performance is not a guide to future performance. It is your responsibility to ensure that you make an informed decision about whether or not to invest with us. If you are still unsure if investing is right for you, please seek independent advice. Saxo Markets assumes no liability for any loss sustained from trading in accordance with a recommendation.

Apple, iPad and iPhone are trademarks of Apple Inc., registered in the U.S. and other countries. App Store is a service mark of Apple Inc. Android is a trademark of Google Inc.

©   since 1992