Under Chancellor of the Exchequer Kwasi Kwarteng’s “mini-budget” announced on Friday, the UK is proposing the biggest tax cuts in 50 years, including abolishing the 45 percent tax rate on incomes over 150,000 pounds ($162,000).
The price of 5-year UK bonds – through which investors loan money to the government – recorded the sharpest fall since at least 1991. On Monday, the pound sank to a record low against the US dollar as investors rushed to sell the currency and government bonds in a demonstration of scepticism over new Prime Minister Liz Truss’s economic plans, which include large tax cuts funded by steep increases in government borrowing.Īt one point in Asian trading, the pound sank as low as $1.0327, surpassing the previous record low reached in 1985, before making back some of its value. As the British pound plummets in value, the United States dollar is flying high.Īgainst a tumultuous backdrop that includes the Ukraine war, soaring prices and China’s COVID lockdowns, sharp fluctuations of some of the world’s major currencies are injecting new uncertainty into the global economic outlook.
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