The British pound has hit an all-time low against the US dollar after the new UK Chancellor of the Exchequer Kwasi Kwarteng released a “mini-budget” on Friday.
The British pound plunged to $1.033 on Monday morning after reaching a peak of $2.50 to £1 in 1971. Since then, it has increased to $1.08. The sharp decrease is attributed to the lack of confidence in Kwarteng’s budgetary policies, which included universal tax cuts, on the part of the financial market.
The decline on Monday may be related to comments made by Kwarteng on Sunday that suggested additional tax cuts. The UK might face a mountain of debt if these cuts are entirely covered by borrowing on the part of the government.
Life will become much more expensive for the United Kingdom, which is already experiencing a cost of living crisis and is bleeding from post-Brexit trading losses, because the majority of overseas purchases, notably technology goods and petrol, are made in U.S. dollars.
The U.K. is one of the main markets for the U.S. in terms of inbound investment in cinema and high-end television, with Marvel, Netflix, and Amazon content being created in great quantities there.
The fall in the value of the pound makes those productions even more affordable, but over time, they will discover that these savings are countered by inflation on the ground brought on by high-interest rates and general price increases.
Because of the falling pound, purchasing foreign content for domestic consumption will cost more in the U.K.
As the opposition Labour Party’s four-day convention gets underway, Rachel Reeves, the shadow chancellor, accuses Kwarteng of “gambling all of our money.”
Reeves said on the “Today” program on BBC Radio 4: “It is quite alarming. Many people likely expected things to calm down over the weekend, but the Chancellor may have stoked tensions by hinting at additional stimulus measures and unfunded tax cuts on Sunday. As a result, the pound fell to an all-time low versus the dollar overnight.
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