Ray Dalio, founder of Bridgewater Associates LP, speaks during a panel session on day three of the World Economic Forum (WEF) in Davos, Switzerland, on Wednesday, May 25, 2022.
Bloomberg | Bloomberg | Getty Images
The financial market turmoil resulting from the U.K. government’s spending plan “suggests incompetence,” according to billionaire investor Ray Dalio.
“I can’t imagine that this is intended – and if it’s not intended then it’s an understanding question,” Dalio said on BBC Radio 4′s “Today” program Wednesday.
His comments referred to the market turbulence that followed Finance Minister Kwasi Kwarteng’s fiscal announcements late last week. The measures included large swathes of unfunded tax cuts that have drawn global criticism, including from the International Monetary Fund.
The Bank of England on Wednesday stepped in to try to calm markets, saying it would purchase government bonds on a temporary basis to help “restore orderly market conditions.”
Dalio has joined a growing list of economists criticizing the measures proposed by Liz Truss’ administration.
The founder of Bridgewater, one of the world’s largest hedge funds, said it isn’t possible to make wealth by running large deficits because a country needs lenders willing to own that debt.
“It doesn’t stimulate the economy, productivity is what stimulates the economy over the long run,” Dalio said.
“I would think there would be an understanding of the mechanics of that by the government and that’s why it’s concerning,” Dalio said.
Speaking via Twitter, Dalio said the panic selling driving the plunge in U.K. bonds, sterling and financial assets was “due to the recognition that the big supply of debt that will have to be sold by the government is much too much for the demand.”
“That makes people want to get out of the debt and currency. I can’t understand how those who were behind this move didn’t understand that. It suggests incompetence,” he added.
A Downing Street spokesperson was not immediately available to comment when contacted by CNBC.
The U.K. Treasury said Monday that the government would set out its medium-term fiscal plan on Nov. 23.
Jonathan Portes, professor of economics and public policy at King’s College London, told CNBC on Wednesday that the U.K. government’s spending plans put the country’s debt and deficit “on an unsustainable path.”
“It has rightly, I think, been regarded by economists across the political spectrum as unnecessary and damaging,” Portes told CNBC’s “Squawk Box Europe.”