Rolling coverage of the latest economic and financial news, as sterling slumps to a record low against the US dollar
- Pound hits all-time low against dollar after mini-budget rocks markets
Comments by Chancellor Kwasi Kwarteng that he will go even further with historic tax cuts, which are “already being criticised as reckless”, have added to the anxiety, says Susannah Streeter, senior investment and markets analyst, at Hargreaves Lansdown.
She adds:
The worry is that not only will borrowing balloon to eye watering levels, but that the fires of inflation will be fanned further by this tax giveaway, which offers higher earners the bigger tax break.
Momentum now drives the price action in the pound as the exodus from UK assets persists. The sick irony of this is that the weaker the pound gets, the more expensive the government’s liabilities become.
This is either through the price of its imported energy bill, which the government is completely exposed to given the energy price cap policy for households, or higher financing costs due to more expensive gilt yields.
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