Experts:Wary firms will now be far less likely to invest or hire

Scottish firms will be less likely to invest and hire workers after Liz Truss’s proposed tax cuts provoked a collapse of £447 billion in stock and bond markets, an investment expert warned.

The UK’s stock and bond markets lost hundreds of billions of pounds in the nine days since chancellor Kwasi Kwarteng’s “mini-buget” and investor confidence has been badly shaken.

More than £269bn has been wiped from the value of the UK’s top 350 firms since September 5 when Truss was confirmed leader of the Conservative Party.

In that time, a UK Government bond index – which monitors a type of bonds or gilts issued by the UK Government in order to finance public spending – lost more than £160bn in market value, according to data compiled by Bloomberg.

Russ Mould, investment director at leading broker AJ Bell, one of the UK’s biggest investment platforms, said: “A falling share price – or volatile markets – will inconvenience those companies that are hoping to raise money by selling shares, either as a market newcomer or as an already-quoted firm.

“They could also scupper a planned deal if the buyer was hoping to use its shares as a currency rather than cash.

“However gyrations in the bond and gilt markets are potentially quite serious. Any loan that anyone makes will be seen as riskier than that and the lender – or bond buyer – will demand a higher coupon, or interest rate, as compensation for the greater dangers, perceived or otherwise.

“A rising 10-year gilt yield will therefore make it more expensive for firms to borrow or when they have to repay and rollover existing debts and take out new loans.

“The higher interest costs can hit profits and cash flow, limit scope to invest and hire, as well as limiting the amount of spare cash left at the end for dividends for shareholders.

“If yields reach a sufficiently high level then the company may just choose to keep its cash in the bank and not take the risk of investing in new plant or assets or research at all.”

The UK Government has resisted calls to publish an independent report on the cost of their tax-cutting plans before the scheduled announcement on November 23.

The news comes after Truss joined Kwarteng at a meeting with the government’s financial watchdog, the Office of Budget Responsibility. It had offered to cost the plans, which observers say would have reassured the markets, but were turned down. After the meeting, it confirmed it will deliver its first draft of a forecast next Friday but the forecast won’t be made public until November when Kwarteng will reveal his medium-term fiscal plan.

Mould added: “Moving share prices, and rising or falling market capitalisations, should make little difference to the day-to-day operations of most firms.

“They are numbers on a screen and the board must not be swayed, else they fall into the trap of managing the share price and not managing the capital at their disposals – human, physical and financial.

“It will be tempting to cut corners and try to influence the near-term share price but the negative long-term effects can often more than offset the immediate benefits.”

Professor Mairi Spowage, director of the Fraser of Allander Institute, said the financial shockwaves of the plummeting share and bond prices could last some time.

She said: “Shares prices can go up and down but the fact they have been losing value raises the prospect of recession.

“It’s difficult to say what the full impact will be in Scotland. The Scottish economy accounts for