THE POUND has slumped to its lowest level against the dollar since decimalisation in 1971, after the Chancellor hinted more tax cuts would follow those he announced last week.
Sterling fell by more than 4% to just 1.0327 dollars in early Asia trade before it regained some ground to about 1.05 dollars early on Monday, when the euro also hit a fresh 20-year low amid recession and energy security fears.
Kwasi Kwarteng has previously brushed off questions about the markets’ reaction to his mini-budget – which outlined the biggest programme of tax cuts for 50 years – after it was announced on Friday using more than £70 billion of increased borrowing.
Mr Kwarteng on Sunday claimed the cuts “favour people right across the income scale” amid accusations they mainly help the rich.
He and Prime Minister Liz Truss have defended the package, despite analysis suggesting the measures, which include abolishing the top rate of income tax for the highest earners, will see only the incomes of the wealthiest households grow while most people will be worse off.
But Mr Kwarteng insisted he is “focused on tax cuts across the board”.
When it was put to him that his measures “favour overwhelmingly people at the very top”, Mr Kwarteng told the BBC’s Sunday With Laura Kuenssberg programme: “They favour people right across the income scale.”
Ms Truss said her Government was “incentivising businesses to invest and we’re also helping ordinary people with their taxes”.
In an interview with CNN, she rejected comparisons with Joe Biden’s approach, after the US president said he was “sick and tired of trickle-down economics”.
The Prime Minister told the US broadcaster: “We all need to decide what the tax rates are in our own country, but my view is we absolutely need to be incentivising growth at what is a very, very difficult time for the global economy.”
Asked whether she was “recklessly running up the deficit,” Ms Truss said: “I don’t really accept the premise of the question at all.”
Three days after his fiscal statement, the Chancellor indicated his announcements were just the beginning of the Government’s agenda designed to revive the UK’s stagnant economy.