The financial markets have reacted calmly to the news that Rishi Sunak will be the next prime minister of the United Kingdom.
After Commons leader Penny Mordaunt withdrew from the leadership competition, the pound was relatively flat against the dollar on Monday afternoon, while government borrowing costs remained low.
Earlier in the day, the pound rose against the dollar to almost $1.14 before sliding again.
On Sunday, former prime minister Boris Johnson withdrew from the contest.
As a result of the mini-budget proposed by outgoing Prime Minister Liz Truss, the value of the pound fell to an all-time low versus the dollar last month, and government borrowing prices soared.
Investors were alarmed when then-Chancellor Kwasi Kwarteng promised significant tax cuts without specifying how they would be financed – something Mr. Sunak warned about during the Tory leadership election this summer.
To stabilize the financial markets, new Chancellor Jeremy Hunt rescinded nearly all of Ms. Truss’s tax cuts last week, but the markets have remained volatile.
On Friday, the British pound plummeted as low as $1.11 and government borrowing prices increased in response to persistent political uncertainty and fresh economic concerns.
On Monday, the interest rate – or yield – on bonds due to be repaid in thirty years dropped to 3.8%. The rate reached 5.17 percent on September 28 following the mini-budget and Mr. Kwarteng’s subsequent commitment to disclose additional tax cuts, prompting interventions by the Bank of England.
On October 31, Mr. Hunt, who supports Mr. Sunak, is due to outline the government’s economic plan for taxes and expenditures.
He has cautioned that the government faces “very difficult decisions.”
As a result of the mini-budget proposed by outgoing Prime Minister Liz Truss, the value of the pound fell to an all-time low versus the dollar last month, and government borrowing prices soared.
Investors were alarmed when then-Chancellor Kwasi Kwarteng promised significant tax cuts without specifying how they would be financed – something Mr. Sunak warned about during the Tory leadership election this summer.
To stabilize the financial markets, new Chancellor Jeremy Hunt rescinded nearly all of Ms. Truss’s tax cuts last week, but the markets have remained volatile.
On Friday, the British pound plummeted as low as $1.11 and government borrowing prices increased in response to persistent political uncertainty and fresh economic concerns.
On Monday, the interest rate – or yield – on bonds due to be repaid in thirty years dropped to 3.8%. The rate reached 5.17 percent on September 28 following the mini-budget and Mr. Kwarteng’s subsequent commitment to disclose additional tax cuts, prompting interventions by the Bank of England.
On October 31, Mr. Hunt, who supports Mr. Sunak, is due to outline the government’s economic plan for taxes and expenditures.
He has cautioned that the government faces “very difficult decisions.”
