Pound sinks to record low against the dollar as chancellor and prime minister defend mini-budget | Business News

The British pound fell to a record low against the dollar.

The pound fell nearly 5% to $1.0327, falling below the 1985 low seen on Friday.

It went back to $1.05 but is still down about 7% in just two sessions.

The fall came after Prime Minister Kwasi Kwarteng announced the biggest tax cut program in 50 years on Friday.

The £45 billion tax relief package has seen the pound drop to a 37-year low.

Its decline continued as trading opened in Asia and Australia on Monday – stoking fears the pound could fall to par with the US dollar by year-end.

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Both Prime Minister and Prime Minister Liz Truss defended their programme.

In an interview with CNN on Sunday, Ms. Truss dismissed comparisons to US President Joe Biden’s approach after he said he was “sick and tired of the trickle-down economy”.

“We all need to decide on tax rates in our countries, but my view is that we need to spur growth at a very, very difficult time for the global economy,” she said.

Asked if she was “recklessly increasing the deficit”, Ms Truss said: “I don’t really accept the premise of the question at all.”

Mr Kwarteng said his announcements were just the start of the government’s agenda to revive the UK’s sluggish economy.

“We’ve only been here 19 days. I’d like to see, next year, people keep more of their income because I believe it’s the British people that will drive the economy,” he told BBC’s Sunday. With Laura Kuenssberg Program.

Read more: Small budget: PM broke hopes of big wins – but did she misjudge the mood of the public? | Beth Rigby

Mr Kwarteng is said to be considering scrapping the charge for parents earning more than £50,000 and claiming child benefit, increasing the annual allowance for pensions and reducing taxes for those staying at home. take care of your children or loved ones.

If the pound falls to par with the US dollar, it could trigger a rebellion among Tory supporters, who may refuse to vote on the government’s fiscal bill or send a letter of no-confidence. , the Daily Telegraph reported, citing supporters and critics of the prime minister.

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Plan to protect Truss and Kwarteng

When asked if he was worried about a falling pound, falling stock market and rising government borrowing costs, Mr Kwarteng said: “We have to take a much more favorable approach to this. growth and that’s what I said on Friday.

“I think if we can do some reforms…if we get back to business, we can make this country grow and we can grow our economy, and That’s what I’m 100% focused on.”

He declined to comment on market movements, saying: “I’m focused on the long- and medium-term, and I think we need to have a long-term growth plan.”

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