UOB Group economist Lee Sue Ann comments on the announcement of the Growth Plan by Chancellor K.Kwarteng.
Key points
“The Chancellor of the United Kingdom, Kwasi Kwarteng, presented last Friday (September 23) his Growth Plan with the aim of coping with high energy costs and inflation, and increasing productivity and wages. His package of tax cuts is the largest since 1972“.
“There is a great uncertainty around the combined impact of the proposed fiscal measures, along with rising interest rates and a slowing economy. For this reason, financial markets have reacted strongly and negatively to the government’s break with fiscal orthodoxy. The pound sterling suffered the biggest drop since March 2020, reaching the lowest level in 37 years against the dollar. UK Gilts also suffered their biggest slump since March 2020, and bond yields soared.”
“The obvious implication is that interest rates are likely to be higher for longer, with speculation even of a possible inter-meeting rate hike by the Bank of England. (BoE), which we do not rule out. Now we expect the BoE to raise rates to 4.25% by the end of the year and 5.25% by the end of the first quarter of 2023“.
Source: Fx Street
With 6 years of experience, I bring to the table captivating and informative writing in the world news category. My expertise covers a range of industries, including tourism, technology, forex and stocks. From brief social media posts to in-depth articles, I am dedicated to creating compelling content for various platforms.
