UK financial credibility ‘still damaged’ despite 45p tax rate U-turn; factory downturn continues – as it happened
Sterling has recovered its mini-budget losses, but traders and economists warn debacle has hurt UK
The UK government still has a lot to do' to recover its credibility, warns Jane Foley, head of FX Strategy at Rabobank.
Clearly sterling has performed better on the news, but there are still a lot of questions, ultimately the 45 pence tax rate was only a small part of the unfunded tax cuts announced.
The question remains is this enough? The answer will be clear in a few weeks' time when the bank of emergency measures end.
She has been manipulated into this U-turn after senior Conservatives yesterday came out in open revolt at the Treasury's decision to scrap the 45p tax band for the wealthy while refusing to rule out cuts to welfare for the poorest.
Admitting to a communication mistake rather than a serious policy mishap didn't cut it. Now this embarrassing climb down, taking unfunded tax cuts off the table, which Chancellor Kwasi Kwarteng has called a distraction, will help reassure the markets a little that the more reckless nature of this new administration can be reined in by the Conservative party.
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