British pound hasn’t been this weak since Margaret Thatcher became prime minister

A looming recession, a devastating energy crisis, and Highest inflation among G7 countries The pound has fallen over the past year. On Wednesday, he dropped another 0.5% to a low of $1.1406, below his March 2020 low as the Covid pandemic hit the global stage.

The fall sent the dollar to its lowest level against the US dollar since 1985, when Margaret Thatcher was prime minister.

Liz Truss, meanwhile, has a full day at work as Britain’s fourth prime minister since the Brexit vote in 2016, and she’s already staring into the barrel of a potential currency crisis. according to the £150 billion ($172 billion) commitment curb rising energy prices that threaten drive millions of Britons into poverty This winter, the cost of living is soaring.
But she has not disclosed how the state plans to pay for the rescue. Truss has campaigned against tax cuts and said Wednesday she will be against it. windfall tax About your energy company made record profits During the recent surge in fuel prices.

The UK borrowed heavily during the pandemic, but investors could quickly turn against lending more money to the country if it hits a so-called stagflation cycle, where prices keep rising even as the economy shrinks. be.

That could keep traders off the pound, making it harder for an import-dependent economy to pay its bills and further accelerating inflation. This could force the Bank of England to raise interest rates more aggressively, which could hurt the country’s economy as a result.that so-called balance of payments crisis Even if it doesn’t exist, it’s a potential threat.

The truss remains unchanged. She plans to unveil a costly plan to bring down energy prices on Thursday.

On Wednesday, she announced that former Finance Minister Rishi Sunak would pay a £5 billion ($6 billion) tax introduced in May to UK oil and gas producers to fund an earlier energy bailout package. refused to extend.

“I am against the windfall tax,” she told Congress. “I think it would be wrong for companies to put off investing in the UK when they need to grow the economy,” she added.

— CNN Business’s Julia Horowitz and Anna Cooban contributed to this report


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