Pound falls to all-time low against dollar after wave of tax cuts

Kwasi Kwarteng's mini-budget on Friday outlined the biggest programme of reforms for 50 years.

Pound falls to all-time low against dollar as chancellor Kwasi Kwarteng hints further tax cuts on way Simon Dawson/No 10 via iStock

The pound has slumped to its lowest level against the dollar since 1971, after the chancellor hinted more tax cuts would follow those he announced last week.

Sterling fell by more than 4% to just 1.0327 dollars in early Asia trade before it regained some ground to about 1.05 dollars early on Monday.

Kwasi Kwarteng’s mini-budget on Friday outlined the biggest programme of tax cuts for 50 years using more than £70bn in increased borrowing.

The euro also hit a fresh 20-year low amid recession, the forthcoming winter and energy security fears amid the ongoing conflict in Ukraine.

Imports of goods sold in dollars, such as oil and gas, will cost more if the pound continues at this record low level.

It also means Scots on holiday in the US will not see their cash does go as far as in the past.

On Friday, Prime Minister Liz Truss’ new chancellor announced a major change in direction for the Conservative Government in power for the last 12 years.

Kwarteng called it “a new approach for a new era,” as he said he was “determined” to break the cycle that has led to a large tax burden on business and the public.

He cut stamp duty, income tax and announced new low-tax ‘investment zones’ – but none of those apply to Scotland.

Caps will be removed from bankers’ bonuses, while people on benefits face their money being slashed.

The chancellor suggested his announcements were just the beginning of the Government’s agenda designed to revive the UK’s stagnant economy.

One thing that will put more money into Scots’ pockets is a reversal of April’s rise in National Insurance.

Nicola Sturgeon claimed the super wealthy will be “laughing all the way to the bank” following Kwarteng’s mini-budget.

The Scottish Government will continue to pursue a “fairer and more progressive approach to taxation”, one of Sturgeon’s ministers has confirmed.

Scottish Tory leader Douglas Ross called on the Scottish Government to follow the example of UK chancellor Kwasi Kwarteng, after he axed the top rate of income tax for those earning £150,000 a year or more and lifted the cap on bankers’ bonuses.

The £45bn tax-slashing package was met with alarm by economists, financial markets and some Tory MPs – with the pound tumbling to fresh 37-year lows.

The slide continued with some predicting sterling could fall to the same value as the dollar by the end of year – when the Bank of England has forecast the UK will in a five-month-long recession.

Kwarteng has batted away criticism of his mini-budget, defending it as a confident plan for growth.

Scottish secretary Alister Jack insisted that the UK Government’s plan will support households and businesses in Scotland.

The Treasury has estimated the Scottish Government will receive more than £600m as a result of tax cuts elsewhere in the UK.

It also claimed that three million Scottish workers will receive a National Insurance cut worth £285.

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