After the announcement of this “mini-budget”, the pound sterling hit a historic low on Monday, leading the central bank to intervene urgently.
After a week of financial market chaos, UK Finance Minister Kwasi Kwarteng defended his “mini budgetbased on massive tax cuts, claiming that there was “no other choiceas inflation hits record highs in the UK. On September 23 the government unveiled a series of budgetary measures combining massive aid for energy bills and tax cuts targeting the wealthiest, the dizzying cost of which has panicked the financial markets.
“Of course it is an expensive intervention, but what choice did we have? Imagine the cost to the UK economy of mass unemployment, a collapse in consumption and businesses going out of business“, tried to defend himself the Chancellor of the Exchequer in the columns of the Telegram Friday night. “Doing nothing was not an option. The price of inaction would have been far greater than the cost of this plan.»
After the announcement ofmini budget“, the pound sterling reached a historic low on Monday, the International Monetary Fund asked the United Kingdom to review its copy and the central bank even intervened urgently to try to calm things down. Latest disappointment for the government in office for barely three weeks: the rating agency Standard and Poor’s lowered its forecast for British sovereign debt on Friday, going from “steady» at “negative“the prospect of keeping the rating”AA“.
“We must not lose sight of our commitment to sustainable public finances“, wanted to reassure Kwasi Kwarteng, ensuring that he would present on November 23 “a credible plan to bring down the debt” with “a commitment to spending discipline“. For her part, Prime Minister Liz Truss, more unpopular than ever, conceded that there had been “disturbancesbut ruled out a reverse. “It’s going to be a tough winter but I’m determined to do whatever it takes to help families and the economy“, she said Friday.
British households are strangled by inflation at nearly 10% and are worried about whether they will be able to warm themselves or repay their mortgages this winter. Despite the announcement of a freeze on energy price ceilings, prices have nevertheless doubled in one year. And the announced tax cuts will first benefit the richest.
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