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HomeNationalThe pound falls to a new low since 1985 below $1.10Achi...

The pound falls to a new low since 1985 below $1.10Achi News

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The pound falls to a new low since 1985 below $1.10

The British pound fell to a 37-year low below $1.10 on Friday as tax cuts in the UK budget raised concerns about public finances while recession fears rose.

In afternoon trade, sterling fell 2.7 percent to $1.0956, which was last seen in 1985 – when it hit an all-time low of $1.0520.

“Sterling is in danger,” said Deutsche Bank analyst George Saravelos.

“The very large, unfunded tax cuts and other fiscal gifts … only add to our concerns.”

Britain’s new government unveiled a multibillion-pound package on Friday to support households and businesses hit by the highest inflation in decades, cutting taxes as the nation heads into recession.

Finance Minister Kwasi Kwarteng said the caps on rising energy bills would cost about £60 billion ($68 billion) in the first six months.

Kwarteng also canceled planned increases in taxes on both company profits and wages, citing the government’s drive for growth.

He also cut the cap on bankers’ bonuses and proposed a plan to cut the lowest income tax rate – and cut the top to 40 percent from 45.

“These measures will add to the already significant future increase in government borrowing from the cap on household and business energy bills that comes into effect in October,” EY analyst Martin Beck said.

“With gold yields at their highest in a decade and sterling falling significantly in recent months, more lending is a risk and the outcome will depend on the future growth performance of the economy.”

The mini-budget comes after economists warned Britain may already be in recession as soaring fuel and food prices take their toll.

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