What has happened to the British Pound

Speculation was growing that the Bank of England Monetary Policy Committee might have to intervene with an emergency rate hike, sooner than expected. 

by Victor Cherubim

“Working people are paying the price of the Tory government’s casino economics. Labour will cut bills, create jobs and secure energy independence for Britain by 2030.”  ~ Labour leader Sir Keir Starmer in response to the chancellor’s mini-Budget.

When I came to Britain in 1966, the pound bought me US Dollars 2.40 and today it is at a record low against the Green Back, as early trading in markets in South East Asia, collapsed the Pound to $1.0327, the lowest since decimalisation in 1971. Luckily it regained ground to $1.07. What really happened after Black Friday? (23 September 2022).

Representational Image: Sterling tumbled to a record trough on Monday as traders scampered for the exits on speculation the new government’s economic plan will stretch Britain’s finances to the limit. [ Photo: Special Arrangement]

Markets are volatile and naturally, they seem to have taken fright after what our new Chancellor of the Exchequer, Rt. Hon. KwasiKwarteng stated at the weekend that he was ready to slash taxes even further, more than the £45 Billion cuts in his Mini Budget on Friday. 

Speculation was growing that the Bank of England Monetary Policy Committee might have to intervene with an emergency rate hike, sooner than expected. 

Need I say, if Sterling Pound falls to parity with the US Dollar, it could trigger a rebellion among Tory backbenchers who could refuse to vote for the Government’s Finance Bill, or even submit letters of no confidence in PM Liz Truss, said the Daily Telegraph. 

Labour Opposition at Party Conference in Liverpool

The Labour Party at its Annual Party Conference in Liverpool, with Parliament in recess, accused the Chancellor of “fanning the flames” of the crisis and calling the City’s regulator to investigate leaks in his Mini Budget. 

Labour has challenged the “Growth Plan” in the Mini Budget. The fallout has given Labour a well-timed opportunity to lay out an alternative economic plan at its party Conference but does not want to divulge its plans, in advance of a General Election planned for 2024. 

Can Labour win the next General Election? 

After 12 years of Conservative Government, the public is asking this question. As it stands today according to a poll Labour is on course for a sizeable majority whenever the next General Election is called. It is increasing looking like a “Government-in-waiting,”  unless it spoils its chances.

Polls give it today a 12 point lead over the Conservatives, which would land them a comfortable Parliamentary majority, estimated at 56 seats. 

What the Pound record low means for UK?

We know a consideration and delivery of measures announced in the Mini Budget will, however, create new opportunities for an innovative start-up and will help unlock private investment. 

The Mini Budget announcement has envisaged an economic growth goal of 2.5 percent, before the next General election.

A Tory Grandee says the current crisis will pass. Some others have been scathing in their views. Still, others have urged colleagues to be patient and not panic. 

In my view, it is like Boris, the British will always rise to the occasion, which is a trait I have learned in England. 

In my view, a decrease in the wholesale price of gas will over winter make a big difference. 

People cannot only be bought over with “tax cuts”? 

Innovation is the mantra which is built up from a foundation of ideas and knowledge, which the Conservatives have acquired over the past 12 years in Government. This experience is priceless. 

But at the same time, a weak Pound will no doubt fuel the cost of imports depending the cost of living crisis. The Governor of the Bank of England has ruled out any emergency increase in the Bank Rate in the immediate future. That’s “cool” in the colloquial.

How the Conservatives want to play their cards when Parliament reopens will to a large extent determine the outcome of the crisis?

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