UK businesses, markets give contrasting reactions to mini Budget

BUSINESSES in the UK were largely in approval of the “mini Budget” unveiled by Chancellor of the Exchequer Kwasi Kwarteng last Friday (Sep 23), but the markets felt otherwise as they gave it a big thumbs-down.

The pound, British bonds and the stock market all tumbled not long after Kwarteng unveiled £45 billion (S$69.9 billion) worth of tax cuts and other measures to revive the ailing UK economy. He described it as the government’s “biggest package in generations” of tax cuts, that sends the clearest of signals that economic growth is Prime Minister Liz Truss’ top priority.

Even before last Friday, the pound was already on a downward path since Truss became the UK’s 15th prime minister a little over a fortnight ago. Currency traders were given notice when she insisted that she would carry out her leadership campaign promises, as her administration begins to embark on borrowing billions of pounds in an effort to slash taxes and freeze energy prices.