Historic low for the British pound:
Prime Minister Liz Truss's decision to fight rising inflation in the kingdom by taking unconventional measures of drastic tax cuts alongside a significant increase in government spending has caused distrust in the local currency, which may erode further and equalize with the US dollar amid fears that the British economy will be in a state of heavy deficit.
The British pound, or pound sterling, fell by about 5% to a value of $1.0327 at the start of the trading week today (Monday) - the lowest value since it began to be measured using the current method in 1971. Against the euro, the pound also fell to a two-year low.
The coin is worn, photo: AFP
The influx of investors into other foreign currencies follows the economic plan that the Taras government unveiled last week.
The fear is that Taras' measures will only lead to worsening inflation due to the massive budget overrun and the need to finance it through additional loans.
In fact, this is a move by Truss that clearly goes against the position of the Central Bank of Great Britain, which wants to prevent further borrowing to curb government spending and therefore recently raised interest rates again like other developed economies.
If the pound does not recover, the coming recession and gas shortages may be doubly severe, because Britain will find it difficult to import the goods it lacks and the British will not be able to finance the rising expenses due to the rising cost of living.
The loans that the British government will take to finance the lowering of taxes and the various subsidies to ease the cost of living (mainly gas) are the largest they have taken since the early seventies: about 72 billion pounds.
The plan of the 1970s, which was also under the Conservatives, ended in great failure when inflation only worsened and the British economy entered a deep recession, and the rise of Labour.
But Truss hopes that her plan will lead to massive growth that will help her be elected to a second term in about two years, because Britain's economy is very different from that of the 1970s.
Terras believes that her plan will cause massive growth because it will bring investors in the field of finance to London, which is considered the economic capital of Europe, and thus foreign revenues will enter the economy in the form of taxes and investments that will allow an exit from the coming recession and the financing of the massive plans presented.
But the opponents of the plan claim that this forecast is too optimistic and that in the meantime, the only ones who benefit from the low taxes are the people who earn huge sums in the financial sector.
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