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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)
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