British pound plunges to all-time low amid economic ‘perfect storm’

The British pound fell to an all-time low against the US dollar on Monday morning as the currency has lost more than five percent of its value in the past three days.

The pound fell to $1.0373, its lowest level against the US currency since 1971, before surging above $1.09.

The drop follows a decision by the UK government to implement the biggest tax cuts in the past 50 years.

It plans to cut £45 billion, or $49 billion, in taxes and spend more billions to help consumers and businesses struggling with high energy bills due to the pandemic and ongoing conflict in Ukraine.

Because of this all-time dip, in addition to the 20-year low for the euro, which fell to $0.95, investors believe US tourism to the UK and Europe will soar, according to The Washington Post.

Prime Minister Liz Truss, 47, said she expects the economy to turn.

“The UK has the lowest debt in the (Group of Seven), but we have one of the highest taxes,” Truss said. “And what I’m determined to do as Prime Minister, and what the Chancellor is determined to do, is make sure we encourage companies to invest.”

The currency’s fall is the result of the UK’s biggest tax cuts in 50 years, in addition to rising spending costs

Pictured: Chancellor of the Exchequer Kwasi Kwarteng, 47. Kwarteng says UK government will curb electricity and natural gas prices amid currency decline

The long-term decline in the pound could be beneficial, as UK exports are now cheaper for consumers outside the UK, such as the US, and overseas sales for export-oriented companies will also increase.

While non-UK consumers find good news in the currency’s dip, UK households are facing higher energy bills and a nearly 40-year inflation.

Inflation is now at 9.9 percent, from 10.1 percent a month earlier.

Another economist says the combination of tax cuts and higher spending will continue to weigh on the pound and push inflation up like a ‘perfect storm’.

Labor Party spokesman Rachel Reeves said Kwarteng “has fueled the fire” of the instability.

“They don’t gamble with their own money, they gamble with all our money, and it’s reckless and it’s irresponsible and also hugely unfair,” Reeves told Times Radio.

“We’ve only been here 19 days,” Finance Minister Kwasi Kwarteng told the BBC.

“I want people to keep more of their income in the coming year because I believe it’s the British who are going to drive this economy.”

“In the current economic environment, it’s a huge gamble,” said Thomas Pope, an economist for the United States Institute of Government.

A plan to reduce government debt is expected in the near future, Kwarteng told the BBC

Kwarteng added that the government will restrict electricity and natural gas prices and businesses – a move that will both promote rising prices and cost £60 billion.

Britain will be able to afford this because its debt as a percentage of gross domestic product is the second lowest of the Group of Seven – which includes the UK, Italy, Germany, Canada, Japan, France, the US and the European Union .

A future plan to reduce debt will be announced in the near future.

“Obviously I’ll be drafting the medium-term fiscal plan, as we call it, which demonstrates our determination to reduce debt-to-GDP over time,” Kwarteng said.

Analysts say they aren’t sure how low the pound or the euro could fall to the US dollar.

“I think it now depends on what the Bank of England does in response to the pound’s most recent fall,” Susannah Streeter, senior analyst at Hargreaves Lansdown, told the newspaper. Associated Press.

“There has been a dramatic loss of confidence in the government’s economic management. But now the ball is in the Bank of England’s court.’