Posted on 09/26/2022 2:27:35 AM PDT by EBH
The British pound fell to all-time low against the U.S. dollar early Monday after Treasury chief Kwasi Kwarteng pledged a sweeping package of tax cuts, fueling concerns about the government’s economic policy as the United Kingdom creeps toward recession.
The pound fell as low as $1.0373, before rallying to $1.0672 in early London trading. It was its lowest level since the decimalization of the currency in 1971.
The British currency has lost more than 5% of its value against the dollar since Friday, when Kwarteng announced the biggest tax cuts in 50 years. It comes as the government plans to spend billions of pounds to help consumers and businesses struggling with high energy bills that are driving a cost-of-living crisis. The combination sparked investor concern about spiraling government debt.
Kwarteng and Prime Minister Liz Truss, who took office three weeks ago, are betting that lower taxes and reduced bureaucracy will spur economic growth and generate enough additional tax revenue to cover government spending. Economists suggest it is unlikely the gamble will pay off.
(Excerpt) Read more at msn.com ...
Self created implosion.
Same will occur within Europe/EU.
Same will likely occur in the US.
All of which were self-inflicted.
GG.
“Treasury chief Kwasi Kwarteng pledged a sweeping package of tax cuts, “
They now need Rob Mugabe to solve it.
How can tax cuts cause concern? Oh wait! Crony capitalism is the reason. Companies love government stealing from the people and then giving that money to companies for stuff society does not need.
Sounds a bit like Reaganomics. Economists are always surprised when that stuff works.
The headline blames tax cuts but makes no reference to massive government spending mentioned lower in the article.
Please note that the Euro is at an almost 23 year low against the US Dollar, and the Japanese Yen is at a 32 year low against the USD.
If the socialist Labor Party held the majority in the UK Parliament, we would never hear a word about this.
This drama detracts from the new government’s plan the Conservative Party of Liz Truss’s plan to loosen immigration rules to allow more people in.
Business says they need the people to fill the jobs.
10 years after they first proposed it in Britain Unchained, Kwarteg & Truss (and Priti Patel, Dominic Raab et al) are finally able to pass their proposals. But it may be too late for Britain.
If it is tax cuts without a reduction in Gov’t spending, then the reduced revenue (in the first year or so) would require additional money printing, thus additional inflation and additional dilution of the currency.
But as always the case, if significant reforms in Gov’t spending and additional economic growth due to tax cuts, the treasury will receive more revenue in the long run as well as a strong economy.
The NHS is the UK's largest employer. And your GP will still not see you now.
Tax Cuts help if you cannot heat your home and your business closes.
I once read that the NHS is the second-largest civilian employer in the world. Only the Indian railway system employs more.
Summary
The pound touched a record low against the dollar as markets react to the UK’s biggest tax cuts in 50 years
In early Asia trade, the pound fell close to $1.03 before regaining some ground to stand at about $1.07 on Monday morning
A low pound impacts imports of commodities priced in dollars, including oil and gas, will cost more
There are also concerns that inflation will remain high and force the Bank of England to raise interest rates even further
It comes as Chancellor Kwasi Kwarteng has promised more tax cuts on top of a £45bn package he announced on Friday
Under the plans, income tax and the stamp duty on home purchases will be cut and planned rises in business taxes have been scrapped
The euro also touched a fresh 20-year-low against the dollar in morning Asia trade amid investor concerns
Oil and gas priced in dollars. This means higher energy costs for the UK and Europe. It also impacts US exports. We are in a global recession that will be long and deep.
And then there is the war in Ukraine.
And your GP still won’t see you now.
Let’s hear it for socialized medicine.
Re: Truss immigration plan
Mind blowing.
I read a brief description of it yesterday.
Only a professional politician could believe that importing low skill English-as-a-second-language immigrants can some how help the Conservative Party at the polls.
Govt promises to fix NHS pensions issues
Check out what is meant by "fix".
Then there's this...
Seniors have nowhere to go, can't find home care help. This has always been an issue in the UK, but the vaxx mandate there has made it even worse. But somehow the vaxx mandate never gets mentioned. Go figure.
Meet the new boss, same as the old boss.
The UK has a Deep State, too.
And Truss is Deep State.
What the UK needs is a Trump.
Fast.
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