UK’s financial turmoil continues as the pound slumps more than one per cent against the dollar

UK financial turmoil continues as the pound slumps more than one per cent against the dollar and the FTSE 100 falls nearly two per cent as Liz Truss insists the mini-budget was ‘the right thing to do’

  • Sterling sank more than 1% against the dollar on Thursday
  • Sterling fell as low as $1.0763 in London morning deals
  • PM Liz Truss said ‘we are working very closely with the Bank of England’

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Sterling has tumbled more than one percent against the dollar to a low of $1.0763 in morning trading as Liz Truss insisted the mini-budget was “the right thing to do” despite financial turmoil. .

The British pound fell on Thursday and the FTSE-100 fell almost 2%, after the Bank of England (BoE) intervened in the bond markets to avoid a new financial catastrophe, buying long-term government bonds to try to calm the markets.

Breaking her silence after nearly a week of chaos in financial markets, Prime Minister Liz Truss defended her economic plan, saying she was ready to take “controversial” steps to revive growth and would not back down.

“This is the right plan that we have set out,” he said in a series of interviews with local BBC radio stations on Thursday morning.

Asked if she would reverse the mini-budget that shocked markets with the scale of its tax cuts and government borrowing, Ms Truss said: “I don’t accept the premise of the question.”

‘We are facing difficult economic times. I do not deny this. This is a worldwide problem. But what is absolutely correct is that the UK government stepped in and acted at this difficult time.”

Prime Minister Liz Truss still defended her economic plan, saying Thursday she was willing to take “controversial” steps to revive growth.

The prime minister said today that the government had to take immediate action to boost economic growth, in defense of its tax-reduction budget.

She told local BBC radio that the plan was designed to put Britain on a better long-term trajectory and that she was prepared to make tough decisions to help households and businesses during what is expected to be a very hard winter.

She said the government was working very closely with the Bank of England.

Asked during an interview if it was time to roll back the mini-budget, Ms. Truss said: “No, it’s not because… most of the package that we announced on Friday was energy support for individuals and businesses and I I think it was absolutely the right thing to do.

“I have to do what I think is right for the country,” she said, adding that she is prepared to make tough decisions.

Britain’s central bank vowed on Wednesday to buy as many long-term government bonds, or gilts, as needed to calm markets, which have been plagued by concerns that last week’s UK budget will send debt soaring. .

The BoE move “has certainly raised the level of concern about the potential negative economic and financial market fallout from the loss of confidence in UK public finances,” said Lee Hardman, an analyst at MUFG.

Mrs Truss told local BBC radio the plan was designed to put Britain on a better long-term trajectory.

Mrs Truss told local BBC radio the plan was designed to put Britain on a better long-term trajectory.

Mrs Truss told local BBC radio the plan was designed to put Britain on a better long-term trajectory.

Big UK budget tax cuts and a freeze on energy prices, meant to boost the UK’s recession-threatened economy, sent bond yields soaring and the pound tumbled to a record low of $ 1.0350 on Monday as traders feared it would derail public finances.

The BoE move came after the International Monetary Fund criticized Britain’s recent budget, arguing it could increase inequality and worsen inflation.

Finance Minister Kwasi Kwarteng sparked turmoil in financial markets last week when he unveiled a plan to cut taxes without detailing the impact on public finances or how the government would reform the economy to stimulate growth.

The pound sank and British government bond yields soared, forcing the Bank of England to revive its bond-buying program in an emergency move on Wednesday to prop up pension funds.

Ms Truss said the government needed to take urgent and decisive action to protect homes and businesses from rising energy bills.

Of course, that means making controversial and difficult decisions. But I’m prepared to do that as prime minister because what’s important to me is that we get our economy going.”

Asked about the fairness of the ‘Robin Hood’ budget, he said: ‘It’s not fair to have a recession…it’s not fair to have fewer jobs in the future because we have the biggest tax burden.’

Before their appearances, the allies insisted that they have no plans to deviate from the Kwasi Kwarteng economic plan laid out in Friday’s mini-budget.

His announcement that he would scrap the top 45p rate of income tax and cut other levies such as corporation tax and national insurance, while increasing UK borrowing, has prompted calls for him to step down or be replaced.

But Truss is said to have ruled out firing him less than a month after his appointment or making concessions to financial collapse.

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