The British pound saw its biggest one-day drop after the Conservative government announced on the 23rd that it would cut taxes and increase fiscal spending to strengthen the economy.
“The pound plunged as high-risk public borrowing raised concerns about a worsening cost of living crisis,” the Associated Press reported. The Finance Minister announced a comprehensive tax cut policy, saying that it would promote economic growth and generate profits without introducing a corresponding reduction in expenditures (expanding tax cuts).”
The finance minister announced today a cap on soaring energy rates for homes and businesses, and said the funds would be borrowed.
The UK Conservative government's borrowing-driven deficit widening program did not elaborate on its impact on costs or deficit reduction and the government's own goals for borrowing.
Independent analysis estimates that taxpayers will cost an additional £19 billion ($20.7 billion) this fiscal year.
The Associated Press reported that it has triggered the biggest depreciation of the pound against the dollar since March 18, 2020, when Prime Minister Boris Johnson announced the first national lockdown to control the spread of the coronavirus.
The British currency fell more than 3% on the 22nd, as low as $1.0899 in afternoon trading in London at 1.1255.
Conservative Prime Minister Liz Truss must deliver economic results before the general election in the next two years from a prolonged recession in the face of a 40-year high of 9.9% inflation.
The Conservative government is betting on “increasing tax revenue” by providing immediate support to households and businesses to meet the surging energy costs, and by lowering taxes and promoting economic growth.
"We need a new approach for a new era focused on growth," the finance minister said in Congress, which led to a sharp drop in the exchange rate.
The opposition Labor party attacked the government's plan with no figures on its impact on the government's fiscal targets.
"It's a budget without shame, a menu without prices," a Labor spokesperson said.
In 1980, the new Conservative Prime Minister, restoring the Thatcherism of hard-line Conservative Prime Minister Margaret Thatcher, announced a campaign to promote economic growth by reducing taxes, modeled on Thatcherism's small free-market economy. Tax cuts are at the heart of the new Conservative prime minister's argument that it will "benefit everyone" in the idea of stimulating investment, creating jobs and generating more tax revenue.
Treasury Secretary said the government will cut the basic income tax rate from 20% to 19% next year, the top interest rate will drop from 45% to 40%, and a remuneration policy that cancels the planned 6%p increase in the corporate tax rate and leaves it at 19%. said
"This is the biggest tax cut since 1972," Paul Johnson, director of the Independent Financial Institute (IFS), told the Associated Press.
The UK economy has created a new prime minister who claims to be the hard-line Thatcherist successor to the UK economy as the center-right Conservative Party has been competing internally to replace Johnson, who stepped down after a series of scandals over the past three months.
The Yun Seok-yeol administration copied and applied the fiscal expansion program to stimulate corporate investment and stimulate the economy through tax cuts from Thatcherism.
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