Prime Minister Liz Truss’ government announced Thursday a big bet to save the economy, just two days after taking office and hours before the Queen died. Funeral.
Some shops and sports facilities were closed as a tribute, but most parts of the country continued to operate as normal.
Financial markets in London opened on Friday, with stocks rising along with other markets in Europe and Asia. The London Stock Exchange said it expected trading to continue during the period of mourning. It will be closed only for the funeral, a date not yet announced but likely a public holiday.
Selfridges, one of the oldest department stores, has closed stores in London, Manchester and Birmingham, but said it will reopen on Saturday.
The British Academy of Film and Television Arts has canceled its annual pre-Emmys event scheduled for this weekend, but theaters in London’s West End remain open.
Holger Schmieding, chief economist at private bank Berenberg, told CNN Business he expected the economic impact of the Queen’s death to be “small.”
“By suspending the devastating rail strikes for now, we should partially offset the impact from Days of Remembrance. Additional tourism revenue will likely contribute to that,” he said.
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But analysts at Berenberg say the relief package could cost as much as £150 billion ($172 billion), much of which is financed by government borrowing. Finance Minister Kwasi Kwarteng is expected to confirm the plan’s price tag later this month.
But much of the government’s attention as it prepares for the Queen’s funeral and the coronation of her successor, Prince Charles, could turn to events in the coming days. Normal business in Congress will also be suspended for the next few days.
“The imminent emergency budget is likely to be delayed,” Danny Hewson, an analyst at investment firm AJ Bell, told CNN Business.
How the Bank of England responds to a massive increase in government borrowing is also very important. Investors were already worried about the financial health of the UK government, with banks scheduled to meet on Thursday and expected to raise interest rates again.
However, on Friday, the Bank of England announced it would postpone its interest rate decision for a week “in view of the period of national mourning”. We will meet again on September 22nd.
The UK Treasury did not immediately respond to CNN Business for comment. An official Truss spokesperson told reporters that despite the mourning, the energy price cap will be set as planned on October 1.
The pound traded at $1.16 on Friday, recovering from a 37-year low hit earlier in the week, but the long-term decline in its value seen since the global financial crisis could be seen as “the direction of the currency.” It is likely to continue until there is a seismic shift in the economy and economic policy,” Societe Generale macro strategist Kit Jacks said in a note on Friday.
“King Charles III is likely to become the first British monarch to pay more than £1 on the dollar and/or more than £1 on the euro.”
The Bank of England said British banknotes bearing the Queen’s portrait “remain legal tender” and plans to print new banknotes with the portrait of Prince Charles after the mourning period is over. He added that he would announce
— Rob North, Sandra Gonzalez, Max Foster, David Wilkinson, Luke McGee, and Morgan Povey contributed to the report.