Kwasi Kwarteng Usa Britain Russia Ukraine COST UPS Lowe's Kwasi Kwarteng Usa Britain Russia Ukraine

Pound falls to 37-year low against dollar as mini-budget puts markets in spin

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Kwasi Kwarteng’s tax-cutting mini-budget has sent financial markets into a tailspin, with UK government borrowing costs soaring and the pound slumping to a 37-year low against the dollar.Issuing a punishing verdict on the chancellor’s “dash for growth”, traders in the City of London sent sterling tumbling on Friday amid a broad-based sell-off in response to the massive rise in public borrowing required to finance his plans.The pound fell by almost 2% after Kwartengannounced £45bn of tax cuts directed at higher earners, trading close to a symbolic $1.10 against the US dollar for the first time since 1985.The FTSE 100 fell more than 2% to trade below 7,000 for the first time since early March, after Russia’s invasion of Ukraine, while the cost of borrowing for the UK government on international markets rose by the most in a single day for more than a decade.Two-year UK government bond yields – which are inversely related to the value of bonds and rise as they fall – jumped by as much as 0.4 percentage points to come close to 4%, reaching the highest level since the 2008 financial crisis.Borrowing costs on 10-year bonds rose by more than 0.2 percentage points to trade close to 3.8%, continuing a dramatic climb under way since Liz Truss took over as prime minister earlier this month.

At the start of September, yields on benchmark UK sovereign debt have risen by almost one percentage point, significantly more than for comparable advanced economies.It comes after the Treasury said it would finance the chancellor’s tax cuts and the energy price guarantee for consumers and businesses with £72.4bn in additional UK government debt sales than planned for the current financial year.Instead of the £161.7bn planned by the Debt

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