Britain bids farewell to Queen amid worst cost-of-living crisis in decade

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Queen Elizabeth’s death came at a bad time for the UK.

Against a backdrop of rising inflation, falling currency and the worst cost-of-living crisis in decades, the country has lost one of its few indicators of continuity and stability.

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The government of Prime Minister Liz Truss, which on Thursday unveiled a major gamble to rescue the economy just two days into office and just hours before the Queen’s death, has declared a period of national mourning that will last until the day of the funeral.

Some stores and sporting venues were closed as a sign of respect, but across much of the country, business continued as usual.

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London financial markets opened on Friday, with equities gaining ground in line with other markets in Europe and Asia.

The London Stock Exchange said it expects trading to continue during the mourning period. It will only be closed for the funeral, the date of which has not yet been announced but is likely to be a public holiday.

One of the oldest department stores, Selfridges, closed its stores in London, Manchester and Birmingham but said it would reopen on Saturday.

Meanwhile, unions offered some relief from a recent wave of strikes. The Communications Workers Union called off a strike involving 115,000 Royal Mail postal workers planned for this Friday.

Transport unions have also canceled planned stoppages for next week and later this month on railways.

And while the British Academy of Motion Picture and Television Arts canceled its annual pre-Emmy event scheduled for this weekend, theaters in London’s West End were open.

Holger Schmieding, chief economist at Berenberg, a private bank, told CNN Business who expects the economic impact of the queen’s death to be “minor”.

“The interruption of disruptive rail strikes for now should partially offset the impact of the days of mourning. Additional tourist revenues will likely contribute to this,” he said.

Economic bailout interrupted?

News of the monarch’s death came just hours after Truss announced plans to limit Britons’ energy bills from October, providing relief to millions of homes and thousands of businesses struggling to cope with rising prices.

But the rescue package could cost as much as 150 billion pounds ($172 billion), according to Berenberg analysts, and be largely financed by government borrowing.

Finance Minister Kwasi Kwarteng is expected to confirm the price of the plan later this month.

However, much of the government’s attention can now turn to the events of the next few days as it prepares for the Queen’s funeral and the coronation of her successor, King Charles III. Normal business in parliament was also suspended for the next few days.

“The impending emergency budget is likely to be delayed,” Danni Hewson, an analyst at investment firm AJ Bell, told CNN Business .

How the Bank of England responds to the huge increase in government borrowing is also crucial.

Investors are already nervous about the state of the UK government’s finances, and the bank was scheduled to meet on Thursday where it was supposed to raise interest rates again.

But on Friday, the Bank of England announced it would delay its interest rate decision by a week “in light of the national period of mourning”. Now, it will meet on September 22nd.

The UK Treasury did not immediately respond to the CNN Business to comment. Truss’s official spokesman told reporters that the energy price cap would be in effect as planned on Oct. 1, despite the mourning period.

The pound traded higher on Friday at $1.16, rebounding from 37-year lows hit earlier in the week, but the long-term decline in its value seen since the global financial crisis is likely to continue “until that there is a seismic shift in the direction of economics and economic policy,” said Kit Juckes, macrostrategist at Société Générale, in a note on Friday.

“There is a high chance that King Charles III will be the first British monarch to pay more than a pound for a dollar, or more than a pound for a euro, or both,” he added, saying the pound is unlikely to fall below parity with the dollar this year.

As for the UK banknotes, which feature the portrait of the queen, they “continue to be legal tender”, the Bank of England said, adding that it would announce plans to print new money with a portrait of King Charles III after the period of validity ends. mourning.

— Rob North, Sandra Gonzalez, Max Foster, David Wilkinson, Luke McGee, and Morgan Povey contributed reporting.

Source: CNN Brasil

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