Unews World
The pound has dropped to a six-month low after Rachel Reeves gave her strongest hint yet that taxes will rise at the Budget in a major speech on Tuesday morning.
The pound, which was already lower ahead of the speech, fell further after the comments to stand 0.3 per cent lower at 1.31 US dollars and 0.3 per cent weaker at 1.14 euros, not far off last week’s over two-year low against the single currency.
Sterling has been under pressure in recent days amid worries over the UK economy and ahead of the Bank of England’s interest rate decision on Thursday, with another cut seen as being increasingly likely.
Experts appear split on whether that cut will come in November or December, but the chances of a further reduction from 4 per cent currently have increased as inflation is thought to have peaked now at 3.8 per cent while the jobs market outlook looks more shaky.
Meanwhile Britain’s long-term borrowing costs edged lower after the chancellor reiterated an “ironclad” commitment to her fiscal rules.
Yields on UK government bonds, also known as gilts, fell as much as six basis points to 4.38 per cent, while the 30-year yield dropped to its lowest level since April at 5.15 per cent at one stage.
A falling of gilt yields means Britain’s long-term borrowing costs go down, with Ms Reeves again pointing out one of her key targets is to reduce national debt.
Ms Reeves’s comments and pledge on inflation have fuelled expectations that cuts are on the way.
With both businesses and individuals alike set to face tax hikes, industry leaders have been quick to react to point out that confidence remains low following on from previous rises and the changes to national insurance earlier this year.
“Business shares the Government’s ambition to grow the economy, reduce inflation and boost productivity. However, none of that is possible if costs continue to pile up on firms,” said Jonny Haseldine, head of business policy at the British Chambers of Commerce.
Get a free fractional share worth up to £100.
Capital at risk.
Terms and conditions apply.
ADVERTISEMENT
Get a free fractional share worth up to £100.
Capital at risk.
Terms and conditions apply.
ADVERTISEMENT
“That’s why our message is clear – no more tax on business. The Chancellor spoke this morning about choices, hitting firms in the pocket once again would be the wrong choice.
“Our latest research shows business confidence and investment levels continue to suffer. A fifth of firms are expecting lower turnover for the next year, and a quarter have scaled back investment plans.
“Firms across the UK are already feeling bruised and many are struggling to keep their heads above water. November 26th is a make-or-break moment for British business – the Budget must deliver.”
Source link
