In the United Kingdom, the fall of the pound sterling worries economists and investors – Ouest-France

“The pound is in an incredibly worrying situation”; “The pound is in danger. So many formulas used Monday, September 26 by economists and investors to express their anguish in the midst of the fall of the British currency, after the announcement on Friday, September 23 of the costly support plan of the government of Liz Truss to the economy (more than 100 billion pounds!). In fact, the pound fell nearly 5% on Monday to trade below $1.06. In total, it has lost 20% of its value since the beginning of the year. Inflation at its highest rate for 40 years This drop is particularly hard on household finances. Concretely, the price of oil being fixed in dollars, a weak pound will lead to a more expensive tank of gasoline. This is also the case for gas. All of these increases will result in pushing up inflation, which is already at its highest rate in forty years and will reach 13% over one year in October. The cost of UK government borrowing also rose sharply on Monday, rising above 3.8%, a level not seen since 2011. By comparison, in 2021 the rate had ended below 1%. Many critics Critics swell over the executive’s confusing “tax cut plus stimulus” package. The opposition castigates the new government’s “failure” to “respond to the cost of living crisis”. “No economic forecasts, no assessment of the impact of large (tax) concessions on public borrowing”, condemned, for his part, the former member of the Bank of England Andrew Sentence. “It is very damaging to the UK’s reputation as a fiscally responsible nation,” he added. The Bank of England, which promised Monday evening to “closely follow” the evolution of the pound, contented itself with promising to act “at its next meeting” in November. In the meantime, the central bank has already announced that it will carry out a “stress test”, to find out whether the banks will be able to withstand the shocks to come…

chevron_leftchevron_right