Merryn Talks Money — Markets Weekly: Tech and Crypto Slide, BOE Surprise, Turbulence for Gilts and Pound

Podcast: Merryn Talks Money (Bloomberg)
Host: John Stepek (filling in for Merryn Somerset Webb)
Guest: Marcus Ashworth (Bloomberg contributor, bond and European equities specialist)
Date: February 6, 2026

Episode Overview

This week’s “Merryn Talks Money” episode explores the most striking moves in financial markets, focusing on the Bank of England’s unexpected hold on interest rates amid shifting economic data, a significant slide in tech and SaaS stocks, and the resulting turbulence for UK gilts and the pound. John Stepek and Marcus Ashworth dissect UK monetary policy, debate the future for British growth and inflation, and analyze market rotations sparked by AI’s impact on white-collar industries and financial markets.

Key Discussion Points & Insights

1. Bank of England’s Surprising Rate Hold and Shifting Stance

[01:53 – 07:25]

• Economic Forecast Revision:

  • The Bank of England (BOE) lowered its 2026 growth forecast from 1.25% to below 1%.
  • Inflation expectations cut by 100 basis points versus November projections.

  “They have changed their forward expectations of inflation by a full 1%… That’s quite noticeable.”
  — Marcus Ashworth [02:18]

• Interest Rate Implications:

  • Current rates at 3.75% are seen as high given sub-1% growth; markets anticipate near-term cuts.
  • Deputy Governor Sarah Breeden joined those voting for a cut; a 5–4 split on the committee suggests imminent easing, possibly as early as March or April.

  “Four people voted for cut, five stayed on hold. But two of those five… made very clear that they would expect to cut probably next time or certainly by April.”
  — Marcus Ashworth [03:04]

• Unemployment Warning:

  • UK unemployment climbs above 5%, raising concerns about private-sector hiring and spending.
  • The public sector benefits from tax-fueled expansion, while the private sector struggles.

  “Unemployment is now above 5%. I thought that was quite striking.”
  — John Stepek [03:58]

  “People aren't hiring… that is starting to impact on spending.”
  — Marcus Ashworth [04:14]

2. Inflation Dynamics and Public vs. Private Sector Trends

[05:17 – 08:50]

• Divergent Wage Growth:

  • Public sector pay up 7.9% vs. private sector’s ~2.9–3.5%.
  • BOE sees ongoing inflationary effects from public wage settlements.

• Productivity Questions:

  • Marcus challenges the reliability of UK productivity statistics, noting measurement difficulties post-pandemic.

  “We can’t work out how many people are in this country. How can we work out what productivity is?”
  — Marcus Ashworth [08:26]

3. Tech and SaaS Stock Slide, AI Disruption

[08:54 – 11:47]

• Rough Week for Software-as-a-Service (SaaS):

  • SaaS stocks, including London Stock Exchange Group, Sage, Experian, and Relx, suffered steep falls due in part to anxieties around AI-driven disruption in coding and traditional tech roles.
  • Marcus highlights a “massive rotation” in stock markets, with money shifting to value/dividend stocks (e.g., railroads, oil companies).
  • Corporate bond spreads have widened 15–20 basis points, suggesting growing risk aversion toward previously high-flying sectors.

  “AI spend is going in certain places and it will kill the existing software sector really very quickly. We saw some very savage stock market falls…”
  — Marcus Ashworth [09:47]

  “Factors of which, you know, an equity has been rated on are shifting and now we’re seeing value stocks, higher dividend paying, more old economy stocks.”
  — Marcus Ashworth [11:08]

4. Investor Reactions and Retail Opportunity (or Trap?)

[11:47 – 13:46]

• Falling Tech Stock Appeal:

  • Stepek notes retail investors’ instinct to “catch a falling knife” after sharp daily drops like Relx’s 14% fall.

  “What retail investor doesn’t love catching a fallen knife?”
  — John Stepek [11:50]

• AI Legal Tools:

  • A single legal AI tool release was blamed for selloffs—but Marcus suggests this is overdone, with sector risk accumulating over several years.
  • Consulting, law, and accountancy sectors are highlighted as next in line for disruption.

  “You get a well trained graduate to whack it into chat GPT and why do you have to pay someone… to do something which you could do yourself?”
  — Marcus Ashworth [13:15]

5. Broader Implication: White-Collar Work and AI

[13:57 – 15:16]

• Historical Parallels:

  • The hosts compare AI’s anticipated impact on consultants and lawyers to the destruction the internet brought to pre-digital journalism and publishing.
  • Ashworth points to heightened competition and exponential product evolution as new features of the AI transition.

  “It’s a rough crawl world because the turnover of products and the ability to self perpetuate and learn is going exponentially.”
  — Marcus Ashworth [14:33]

Notable Quotes & Memorable Moments

• On surprise BOE policy shift:

  “We’re expecting Snoresville, but no… they have changed their forward expectations of inflation by a full 1% or 100 basis points lower than they thought it would be.”
  — Marcus Ashworth [01:59 & 02:18]

• On unemployment:

  “People aren’t hiring and that is starting to impact on spending.”
  — Marcus Ashworth [04:14]

• On productivity data:

  “We can’t work out how many people are in this country. How can we work out what productivity is?”
  — Marcus Ashworth [08:26]

• On AI’s threat to the software sector:

  “AI spend is going in certain places and it will kill the existing software sector really very quickly…”
  — Marcus Ashworth [09:47]

• On professional services and AI:

  “Accountants, lawyers, consultants are all going to find things harder, aren’t they?”
  — Marcus Ashworth [13:57]

Timestamps for Key Segments

• 01:53 – BOE rate decision, growth/inflation expectations
• 03:58 – Unemployment, impact on policy and private sector
• 05:17 – Public vs. private sector growth, wage divergence
• 07:25 – Productivity puzzle and measurement skepticism
• 08:54 – Tech sector shock: SaaS stocks tumble, AI’s growing role
• 11:08 – Stock market rotation: value vs. growth
• 11:47 – Retail investor psychology on tech drops
• 13:15 – White-collar disruption in legal/consulting sectors
• 13:57 – Historical parallels: AI now, internet then

Tone & Language

The conversation alternates between relaxed banter, pointed financial analysis, and dry wit—especially in describing the “rough crawl world” of white-collar AI, the fraught “catch a falling knife” mentality in retail investing, and skepticism about the precision of economic statistics.

Summary Takeaways

• The Bank of England may be forced to cut rates sooner than markets expect, driven by weak growth and falling inflation.
• Private sector hiring is slowing, and surging public sector pay is driving divergent economic fortunes.
• Markets are rapidly rotating away from previously dominant SaaS and tech stocks, with value and dividend payers coming back into favor.
• Artificial intelligence is emerging as an existential threat not only to coders but to broad swathes of professional white-collar work.
• Retail investors should approach sharp tech declines with caution amid sectoral transformation and possible overcorrections.