Thursday, October 6, 2022 - 09:50

The pound has taken a massive hit in its value for much of this year as high inflation and the fears of recession in the UK have sparked the downward trajectory resulting in a big sell off of sterling from investors, which could have severe knock on effects for the Gibraltar economy.

Prime Minister’s Liz Truss’ recent “mini budget” caused further panic in the markets, as it unveiled a wide ranging £45 billion tax cut plan, in addition to a £150 billion energy support package for households and businesses, all to be paid for with excessive borrowing.
The UK’s Debt Management Office has said that there will be an increase of £72 billion of borrowing for the current financial year.
On September 26, three days after the UK Chancellor Kwasi Kwarteng made the budget announcement, the pound sunk to a 50-year low against the US dollar, with £1 buying just $1.03.
Since then the pound has steadied itself as the 45p top rate of tax was reintroduced by the Conservative government, in what has been a humiliating U-turn.
There has been a backlash in allocating a tax cut for the highest earners amid a cost of living crises, plus there have been fears over whether Truss could even get the budget plan through parliament, if there was a revolt over the strategy from Conservative MPs.