The pound falls to an all-time low against the US dollar amid fears of UK tax cut plans

The pound has fallen to an all-time low against the US dollar as markets’ confidence in the government’s economic plans was weakened after the Chancellor last week announced the biggest tax cuts in 50 years and announced more.

Sterling hit its lowest level against the dollar since decimalization in 1971, falling more than 4% in early Asian trade to just $1.03 before regaining some ground to around $1.07 early Monday.

The euro also hit a fresh 20-year low amid recession and energy security fears ahead of what is expected to be a painful winter across Europe as the war in Ukraine shows no sign of ending.

Experts warned that the pound’s plunge towards parity with the dollar will push up the cost of goods even further, potentially worsening the cost-of-living crisis while also making it more expensive for the government to borrow money.

Shadow Chancellor Rachel Reeves accused Chancellor Kwasi Kwarteng and Prime Minister Liz Truss of playing recklessly with the UK’s finances.

The Labor MP told Times Radio: “Rather than blaming everyone else, the Chancellor and the Prime Minister, instead of being like two gamblers in a casino chasing a losing streak, they shouldn’t just be paying attention to the reaction in financial markets , but also to the public.”

She added, “They don’t gamble with their own money, they gamble with all our money, and it’s reckless and irresponsible and grossly unfair.”

Mr Kwarteng has previously brushed off questions about the markets reaction to his mini-budget – which outlined the biggest tax cut scheme in 50 years – after it was announced on Friday and used more than £70billion in increased borrowing.

He claimed on Sunday that the cuts “benefit people across the income spectrum,” arguing they mostly help the wealthy.

But financial markets remain uneasy, and there are fears the Bank of England may even be forced to intervene with an emergency rate hike to curb rising inflation fueled by the tax cuts.

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https://www.newschainonline.com/news/financial-news/pound-falls-to-all-time-low-against-us-dollar-amid-fears-over-uk-tax-cut-plans-294597 The pound falls to an all-time low against the US dollar amid fears of UK tax cut plans

Mike Fahey

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