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UK market meltdown? Nothing to see here, Treasury minister says

09/24/2022 | 04:12am EST
British PM Truss and Chancellor of the Exchequer Kwarteng visit Berkeley Modular, in Northfleet

LONDON (Reuters) - Britain's deputy finance minister on Saturday played down a historic collapse in the pound and government bonds in response to the country's new economic growth plan, which sent international investors heading for the exit.

The pound slumped 3.6% on Friday below $1.09, a new 37-year low against the dollar, while gilts suffered their worst day in decades as the market digested finance minister Kwasi Kwarteng's announcement of a borrowing-funded drive for growth.

"Let's be clear, the interest rates payable on government gilts is about the same in the United Kingdom now today as it is in the United States," Chris Philp, Britain's deputy finance minister, told Sky News when asked about the market moves.

"You mention the dollar, that's been strong against a number of currencies, including the yen and the euro."

The pound has fallen more than 11% against the dollar over the last three months, making it the worst-performing major currency recently. It fell to its lowest since January 2021 against the euro on Friday.

Kwarteng scrapped the country's top rate of income tax and cancelled a planned rise in corporate taxes - all on top of a hugely expensive plan to subsidise energy bills for households and businesses.

The Resolution Foundation think tank, which focuses on living standards, said the plans pointed to an extra 400 billion pounds of borrowing over the next five years.

"(The reason) we're doing this isn't for intraday moves in the currency market, Philp said.

(Reporting by Andy Bruce; Editing by Frances Kerry)


ę Reuters 2022
Stocks mentioned in the article
ChangeLast1st jan.
AUSTRALIAN DOLLAR / EURO (AUD/EUR) 0.46% 0.64466 Delayed Quote.0.17%
AUSTRALIAN DOLLAR / JAPANESE YEN (AUD/JPY) 0.26% 92.822 Delayed Quote.9.75%
BRITISH POUND / EURO (GBP/EUR) 0.41% 1.16385 Delayed Quote.-2.38%
BRITISH POUND / JAPANESE YEN (GBP/JPY) 0.16% 167.456 Delayed Quote.6.91%
BRITISH POUND / US DOLLAR (GBP/USD) 0.22% 1.226 Delayed Quote.-9.76%
CANADIAN DOLLAR / EURO (CAD/EUR) -0.14% 0.695551 Delayed Quote.0.06%
CANADIAN DOLLAR / JAPANESE YEN (CAD/JPY) -0.43% 100.057 Delayed Quote.9.67%
CANADIAN DOLLAR / US DOLLAR (CAD/USD) -0.38% 0.73241 Delayed Quote.-7.41%
EURO / JAPANESE YEN (EUR/JPY) -0.28% 143.838 Delayed Quote.9.56%
EURO / US DOLLAR (EUR/USD) -0.21% 1.05324 Delayed Quote.-7.55%
INDIAN RUPEE / EURO (INR/EUR) 0.02% 0.011512 Delayed Quote.-1.87%
INDIAN RUPEE / JAPANESE YEN (INR/JPY) -0.24% 1.657166 Delayed Quote.7.50%
INDIAN RUPEE / US DOLLAR (INR/USD) -0.21% 0.012127 Delayed Quote.-9.45%
JAPANESE YEN / SWISS FRANC (JPY/CHF) -0.04% 0.684 Delayed Quote.-13.12%
NEW ZEALAND DOLLAR / JAPANESE YEN (NZD/JPY) 0.52% 87.594 Delayed Quote.10.02%
NEW ZEALAND DOLLAR / US DOLLAR (NZD/USD) 0.60% 0.64148 Delayed Quote.-7.09%
US DOLLAR / EURO (USD/EUR) 0.21% 0.949451 Delayed Quote.8.16%
US DOLLAR / JAPANESE YEN (USD/JPY) -0.05% 136.575 Delayed Quote.18.52%
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