The pound has slumped to its lowest level against the dollar since decimalisation in 1971, after the Chancellor hinted more tax cuts would follow those he announced last week. Sterling fell by more than 4% to just 1.0327 dollars in early Asia trade before it regained some ground to about 1.05 dollars early on Monday, when the euro also hit a fresh 20-year low amid recession and energy security fears.
Kwasi Kwarteng has previously brushed off questions about the markets’ reaction to his mini-budget – which outlined the biggest programme of tax cuts for 50 years – after it was announced on Friday using more than £70 billion of increased borrowing. Mr Kwarteng on Sunday claimed the cuts “favour people right across the income scale” amid accusations they mainly help the rich.
He and Prime Minister Liz Truss have defended the package, despite analysis suggesting the measures, which include abolishing the top rate of income tax for the highest earners, will see only the incomes of the wealthiest households grow while most people will be worse off. But Mr Kwarteng insisted he is “focused on tax cuts across the board”.
