After the Prime Minister sacked Kwasi Kwarteng there has been some “slight optimism” for investors and is now set to go back on her tax pledge.
Mike Owens, UK Sales Trader at Saxo, said, “GBP rose to $1.136 in the early hours, but has since scaled back to $1.120, as the country awaits the PM’s latest update, bringing slight optimism to investors who watched the market tank off the back of Kwasi Kwarteng’s ‘growth plan’ last month.
“This morning the Chancellor has ended up losing his job, with Truss, who has persistently insisted she is not for turning, now set to go back on her corporation tax pledge, instead raising corporation tax to 25 percent, previously set by Rishi Sunak.
“This historic U-turn could bring some joy to the market, though act as a warning and increase uncertainty over further short term change of hearts, which will continue to see the economy travel down Liz Truss’ political helter skelter.”
James Watkins, Head of Policy and Public Impact at London Chamber of Commerce and Industry (LCCI), said, “With business confidence at an all-time low, we are extremely disappointed that the Government has brought about so much unnecessary volatility in recent weeks.
“The turmoil in financial markets has implications for the real economy. Business confidence is near non-existent – one in three businesses expect their own profitability to worsen over the coming 12 months – and the removal of the Chancellor brings more uncertainty for business trying to plan into the year ahead.
“Spiralling energy prices, an increasingly bleak monetary situation, and a lack of communication between the government and business are deeply concerning for firms, and by extension, the UK’s economic landscape.
“What businesses need is long-term clarity on policy, regulations, and taxes which can only be brought about by a stable government. In the absence of this, businesses across London and the UK will suffer through no fault of their own.
“The new Chancellor must commit to a reset in relations between government and business that will encourage macroeconomic stability and put the UK economy back on the path to growth.
“For this to happen, the government must set out a path to sustainable finance and give businesses clarity on their future fiscal policy. Stability must be restored as a matter of urgency to enable businesses to plan for the future and aim for growth.”
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