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The pound rose sharply after the British authorities rejected the budget plan


October, 03 2022
watermark Economic news

The pound jumped sharply on Monday after the British government announced the cancellation of a plan to reduce taxes for the rich, which was a shock to the market and scared investors.


British Finance Minister Kwasi Kwarteng said today that the government is ready to abandon the plan to abolish the 45% maximum income tax rate. Against this background, the pound reached $ 1.1263 in a pair with the US dollar. 


Last Monday, the British currency fell to a record low of 1.0356. Investors were scared by the fact that tax cuts would spur inflation and lead to an even faster increase in the interest rate. And this will undermine the already struggling UK economy.


Several members of the ruling Conservative Party also opposed the tax reduction program. Citizens themselves also spoke out against it, judging by the results of public opinion polls. 


Earlier, the International Monetary Fund also sharply criticized the new fiscal package, which includes the rejection of the planned increase in the social security tax rate and a reduction in the tax on the purchase of real estate below 250 thousand pounds. Representatives of the IMF said that this would contradict the tightening of the monetary policy of the Bank of England.


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Foreign exchange trading carries a high risk of losing money due to leverage and may not be suitable for all investors. Before deciding to invest your money, you should carefully consider all the features associated with Forex, as well as your investment objectives, level of experience, and risk tolerance.