Felix Martin, chair of the Cost Benefit Analysis Panel of the UK Financial Conduct Authority and Peter Warburton, director of Economic Perspectives and Halkin Services, will contribute their perspectives by way of introduction.
Felix has written recently on the topic of the private credit boom, arguing that the flexibility of banks’ balance sheets – ultimately backstopped by the central bank – is an essential feature of the financial system rather than a bug. It enables the banking sector to absorb the unexpected shocks to credit demand that are an intrinsic part of a capitalist economy. Finance provided by capital markets, by contrast, is merely a recirculation of savings that they have gathered from others. While capital markets score highly on the efficient allocation of risks, “without the support of a sufficiently-sized banking sector, it would be dangerously brittle”.
Peter has repeatedly highlighted the deterioration in the UK financial balance sheet and the associated increase in foreign ownership of UK assets, bringing a vulnerability to Sterling crisis and/or a buyers’ strike in the gilt market. The aggressive use of the Bank of England’s balance sheet in recent years has exposed the UK taxpayer to open-ended losses on the sale of its gilt portfolio, compounding the escalation of the debt service burden attached to public debt. While the financial media is obsessed with short-term macro outcomes and the prospects for interest rates, structural issues relating to balance sheets and financial stability risks are seldom aired. The new government may well confront a financial crisis which forces the economy into recession.
Felix is currently a non-resident senior fellow of the Center for Global Development, which works to reduce global poverty and improve lives through innovative economic research that drives better policy and practice, and chair of the Cost Benefit Analysis panel of the UK Financial Conduct Authority.
He graduated from Balliol College, Oxford with a First Class degree in Classics in 1996. In 1998, he gained an M.A. in International Relations from John Hopkins University’s School of Advanced International Studies, where he was a Fulbright Scholar. Between 2001 and 2006 he gained first an M.Sc. and then a D.Phil. in Economics from Oxford University. Felix began his career as an Economist at the World Bank in Washington, DC in 1998. Between 1998 and 2008, he spent two spells at the Bank, working mostly on sovereign lending programmes and debt restructuring in Eastern Europe, in close co-operation with the European Commission, the IMF, and the US Treasury.
In 2008, Felix joined Thames River Capital as an Economist and Investment Analyst advising on sovereign and corporate investments across all areas of the fixed income markets for the Global Credit Division’s five UCITS funds. In 2013, he joined Liontrust Asset Management as co-manager, with Michael Mabbutt, of the Liontrust Global Strategic Bond Fund. Felix is the author of Money: The Unauthorised Biography – which was a Financial Times economics book of the year in 2013.
In 2016, Felix co-founded 1167 Capital, an active manager of global and emerging market bonds.
Dr Peter Warburton is director of Economic Perspectives Ltd, an international consultancy formed in 1996, and managing director of Halkin Services Ltd, a risk management and asset allocation service, formed in 2002. He was economist to Ruffer LLP, an investment management company for 15 years until 2017 and spent a similar length of time in the City as economic advisor and UK economist at Robert Fleming and Lehman Brothers. Previously, he was an economic researcher, forecaster and lecturer at the London Business School and what is now the Bayes Business School. He published Debt and Delusion in 1999. He has been a member of the IEA’s Shadow Monetary Policy Committee since its inception in 1997. He is a contributor to the Practical History of Financial Markets course run by Didasko, an education company, and teaches occasionally at Heriot-Watt Business School.