Alexander Wood has been featured in GRR’s article, “Strong US dollar could lead to increase in restructurings, lawyers say after pound hits record low.” The article presents the opinions of a number of leading individuals in the restructuring market as they consider the impacts of the UK government’s adoption of a tax cutting budget.
Read Alexander’s excerpt from the article below:
Shearman & Sterling partner Alexander Wood in London says the pound’s collapse “is yet another shock to the economy that will impact consumers, business and ultimately market confidence.”
Wood notes that the cost of certain key goods like oil and gas, which are based on dollar prices, and other foreign-manufactured goods will increase, from their already high levels caused by the Russia-Ukraine war.
“This will add to the cost-of-living crisis and inflationary pressures meaning that the Bank of England will be more likely to continue to increase interest rates, further putting pressure on corporate borrowers,” Wood says.
Businesses paying for non-sterling imports with sterling revenue will also see their cost base increase, which will affect profit margins, he adds, noting that the cost of foreign supplies and even acquisitions, including strategic investments, will increase as well. Wood notes that British government bonds – GILTs – have also been affected by the pound’s collapse, pushing yields to a record high, and points out that parties like financial institutions holding such instruments will see significant volatility in their value.