British Pound Plunges To Record Low As Tax Cuts Spark Concern
Newsy
The pound fell as low as $1.0373 Monday, before rallying to above $1.07 in early London trading.
The British pound fell to all-time low against the U.S. dollar early Monday after Treasury chief Kwasi Kwarteng pledged a sweeping package of tax cuts, fueling concerns about the government’s economic policy as the United Kingdom teeters toward recession.
The pound fell as low as $1.0373, its lowest level since the decimalization of the currency in 1971, before rallying to about $1.08 in London afternoon trading.
The weakening currency piles pressure on the U.K.’s new Conservative government, which has gambled that slashing taxes — and increasing borrowing to compensate — will spur economic growth. Many economists say it’s more likely to fuel already high inflation, push down the pound and drive up the cost of U.K. government borrowing — a potential perfect storm of economic headwinds.
