Pound slump triggers political shock: Conservative MPs call for rate hikes, Labour’s sword points to overturning tax cuts
Financial Associated Press, September 27 (Editor Zhao Hao) As the pound fell to an all-time low once morest the dollar, more and more Conservative MPs began to sit still.
As the UK’s ruling party, some Conservative MPs believe that the Bank of England needs to intervene in the decline of the national currency, such as taking emergency interest rate hikes to calm the market’s nervousness regarding the government’s overly planned economic plan.
After the announcement of the “mini budget”, GBP/USD once fell by more than 800 points, and now it has recovered some of the losses and reported 1.0663. According to foreign media reports, the possibility of an emergency rate hike by the Bank of England is increasing. “When people start thinking regarding an emergency, it means the political outlook for the (Conservatives) is bad,” said a former minister, who asked not to be named.
Last week, Chancellor of the Exchequer Quasi Kwarten released the government’s “mini-budget” – a sharp rise in the pressure on the government’s fiscal debt while cutting taxes. According to the Financial Associated Press, the plan requires the government to borrow an additional 72 billion pounds, which will be the largest increase in the British government’s fiscal debt in nearly 50 years.
(Source: Kwarten’s official Twitter) Not only that, but Kwarten promised “more content” on tax cuts on Monday, stoking fears of inflation and soaring public debt. Some analysts say that the UK is currently struggling to deal with the cost of living crisis, and this potential turmoil may engulf the newly established government of the new Prime Minister Truss.
Another Conservative MP revealed that the party did not fully support the “mini-budget”. He also said that skepticism had extended to Truss’ cabinet, which was concerned regarding the outlook for inflation and whether Britain would be able to pay its debts, with some even wanting to vote once morest the plan.
Labour: Top tax rate to be restored following victory
Labour leader Keir Starmer reiterated at a Labour Party conference in Liverpool on Monday that the “mini-budget” would ultimately only help the wealthiest to cut taxes, but prices would rise for the working class.
Earlier, when asked regarding Kwarten’s decision to announce the abolition of the 45% tax rate, Starmer made it clear that “it is not right to cut taxes for those earning hundreds of thousands of pounds a year at a time when our economy is struggling. The choice that working people are struggling with…it’s the wrong decision.”
Starmer said people were facing a “very tough winter” and that “it was a failure of 12 years of Conservative rule…they made bad decisions, they didn’t plan for the future.” After being asked regarding his future in power On whether tax restrictions will be reinstated, Starmer said: “Yes.”
(Source: Keir Starmer’s official Twitter) Rachel Reeves, Labour’s economic policy director at the meeting, said, “It’s time to have a government on your side. No Doubt it will be a Labour government, and this government is on its way.”
Rivers promised to “build British industry” by using a national wealth fund similar to the Norwegian and Singapore funds. £8bn was initially planned to be earmarked for green projects, while a new minimum wage would also be set.