The British pound has resumed a slide that picked up pace last week after the U.K.’s new government outlined plans to cut taxes and boost spending. The pound dipped as low as $1.0349 per U.S. dollar early Monday but then rebounded to $1.0671, down 2.3%.
The pound fell as low as $1.0373, before rallying to $1.0672 in early London trading. It was its lowest level since the decimalization of the currency in 1971.
The British currency has lost more than 5% against the dollar since Friday, when Kwarteng announced the biggest tax cuts in 50 years at the same that the government is planning to spending billions of pounds to help consumers and businesses struggling with high energy bills. That sparked investor concern about spiraling government debt.
Kwarteng and Prime Minister Liz Truss, who took office three weeks ago, are betting that lower taxes and reduced bureaucracy will spur economic growth and generate enough additional tax revenue to cover government spending. Economists suggest it is unlikely the gamble will pay off.Opposition Labour Party economy spokeswoman Rachel Reeves said Kwarteng had “fanned the flames” of instability by talking up more tax cuts, and said the government’s policies were “reckless.
When grilled about his economic policy on Sunday, Kwarteng said he believed the government was acting responsibly.
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