Legal & General’s chief investment officer warned more banks will fail as interest rates continue to rise.
The Bank of England is widely expected to announce another increase in rates at midday, despite turmoil in the banking sector, as it continues its fight to tame rising inflation, a battle far from being won as shown by yesterday's hit CPI figures.
Referring to the banking turmoil, Sonja Laud from L&G told BBC Radio 4's Today programme: "Over 70 years and every hiking cycle we have seen in that period, we have never seen a hiking cycle that has not led either to a recession - which is 80% of the cases - or a financial crisis, or both.”
"The question always has been why should this time be different?”
"If you slam on the brakes, the chances are something will break and it is always the weakest links that are flushed to the surface first,” she explained.
"These were unique business cases and challenged business models that we have seen first.
"We have to expect more will break simply because we are trying to slow down the economy in order to arrest inflationary pressures," she warned.