3 godzin temu
The British pound has plummeted to multi-year lows, falling to a two-and-a-half-year low against the euro at 1.13 and a three-month low against the dollar at 1.32. The currency dropped 0.4% against both major currencies as investors grew increasingly concerned about the UK's economic prospects ahead of Chancellor Rachel Reeves' Budget on November 26.
The selloff intensified after reports that the Office for Budget Responsibility will downgrade UK productivity forecasts by 0.3 percentage points. This technical adjustment could blow a £21 billion hole in public finances, with each 0.1 percentage point downgrade costing around £7 billion. Combined with existing spending commitments, economists warn Reeves faces a fiscal deficit potentially reaching £50 billion.
Prime Minister Keir Starmer repeatedly refused to rule out breaking Labour's manifesto pledge not to raise income tax, National Insurance or VAT when challenged in Parliament. «The Budget is on the 26 November and we will lay out our plans,» Starmer told MPs, marking a stark shift from July when he answered "yes" to the same question about honoring tax promises.
Chancellor's Defiant Response
Reeves acknowledged the mounting pressure but struck a defiant tone in a Guardian article. «Austerity, a chaotic Brexit and the pandemic have left deep scars on the British economy that are still being felt today,» she wrote. The Chancellor insisted: «I am determined that we don't simply accept the forecasts but we defy them.»
She signaled difficult decisions ahead, stating: «These decisions [...] don't come for free and they are not easy, but they are the right, fair and necessary choices.» Reeves emphasized that «if productivity is our challenge, then investment is our solution,» while ruling out a return to austerity or increased borrowing to fund public services.
The Institute for Fiscal Studies has warned that Reeves may need to find £22 billion in tax rises or spending cuts to meet debt targets. Former Conservative Chancellor Jeremy Hunt called the productivity downgrade a «hammer blow» to Labour's plans, adding pressure on a government that campaigned on protecting working people from tax increases.
Note: This article was created with Artificial Intelligence (AI).
