Complaints abound | The pound exchange rate once plummeted, officials remained silent

Complaints abound | The pound exchange rate once plummeted, officials remained silent

Less than a month after the inauguration of new British Prime Minister Liz Truss, he immediately launched the largest tax cut of the last 50 years in a “budget” in an attempt to stimulate economic growth with “shock therapy” . However, the growth stimulus did not produce results, but instead stimulated investors’ nerves, causing the pound exchange rate to plummet for a time, dropping to the lowest level in history, forcing the Bank of England to bail out. market and intervene in the bond market, which is unprecedented. Government officials disappeared en masse early last week when the market was turbulent. Even after Zhuo Huisi and Kwasi Kwarteng, a financial company, began giving interviews, the stern stance of refusing to change positions and hesitant response failed to restore the people’s trust. , the new prime minister’s popularity plummeted to only 15 percent.

The New Deal fueled the market, the Bank of England bailout

Hao Ting, the new finance officer, went to Congress on the 23rd of last month to read aloud the “2022 Growth Plan”, called the “Mini Budget” by the outside world. Scaling up tax cuts as a major axis to stimulate economic growth.

However, with inflation at its 40-year high in the UK, investors fear that authorities are injecting money into the economy via the supply side right now, which could push inflation higher and cause a strong depreciation of the pound sterling. The British pound plunged to a 37-year low on the day the policy was announced, but the decline continued until early last week: the lowest price against the US dollar was 1.0327 and the pound is dropped below 8.2 against the Hong Kong dollar bit lower.

In the context of the “big water” that froze household electricity bills for two years, Guan Haoting insisted on cutting taxes before the Bureau of Budgetary Responsibility (OBR) released the latest economic forecasts, which meant that the authorities announced the taking of loans at unknown economic prospects, triggering a crisis of confidence in the markets. Government bonds were sold off. Since the policy announcement on 23 and last Wednesday (28) in just four trading days, the 10-year Treasury bond yield has increased 120 basis points to 4.6%, the largest increase in five days since. 1976.

The surge in government bond yields represented a collapse in the value of UK government bonds, sparking bankruptcy fears for debt-based pension funds. With this in mind, the Bank of England stepped in to bail out the market on Wednesday by announcing an “unlimited” repurchase of 20- and 30-year government bonds related to pension funds, and ultimately successfully halted the sell-off. .

Officers silently miss Zhuo Kui with hesitation

Compared to the Bank of England, which intervened, the UK government has done little in the past week. Earlier in the week, when the pound exchange rate plummeted, the airwaves from the Minister of State down to the Undersecretary were almost completely eliminated, and even finance-related Hao Ting avoided questions when he was “fucked” by reporters on the street, saying only that he would not comment on the situation. However, while the ruling Conservative Party held its annual party conference this week, Mr. Zhuo Huisi, the party leader, had already arranged a routine radio interview before the meeting, which gave the media the opportunity to question the prime minister, who was not seen, on Thursday.

The eight regional radio hosts asked cutting questions, including “Where have the last few days been?”, “Are you ashamed of what you’ve done?”, “How are the tax cuts for the rich and the rise? mortgage rates can help the country? ” family? “etc. In the face of seething public complaints, Zhuo Huisi seemed unprepared, pausing for a few seconds before replying many times, hesitating and more often falsely saying that British families could not pay more than £ 2,500 a year (about £ 2,500 per year) due to the electricity bill blocking policy (22,000 HKD) electricity bill. In fact, what is frozen is the cost per kilowatt hour of electricity and the £ 2,500 figure is based on typical household electricity consumption , even though users with high electricity consumption actually pay higher electricity bills.

Companies refuse to let people’s hopes collapse

Zhuo Huisi did not let himself go in the radio interview, but only reiterated his coherent position, saying that there will always be people who will oppose a certain measure, but even if the decision is difficult, he must continue, emphasizing that the policies formulated by the authorities are right and what you can’t do is let the situation be. Development does not interfere and what the UK needs is the creation of well-paid jobs through economic growth. By Friday, Zhuo Huisi was in “The sun“The author admits that the difficult decision leads to short-term” chaos “, but urges the public to trust the authorities, to promise to firmly manage the country’s finances and will explain within a month how to reduce the debt / GDP ratio to medium term. And the relative wealth of Hao Ting is also in “daily telegraphThe “Average Budget Plan” announced by the authorities on 23 November will be a “credible plan” to put public finances back on track and commit to respect fiscal discipline.

After the Bank of England announced the bailout, the pound exchange rate returned to its pre-turmoil level on Friday, versus US $ 1.1234, and the prices of repurchased 20- and 30-year government bonds also did. have stabilized, but the price of 20- and 30-year government bonds not repurchased also stabilized, while 1- and 10-year Treasury yields remained high, staying above 4%.

While the authorities have been able to calm the markets for the time being, they appear to have failed to allay national discontent. Support for the ruling Conservative party dropped 7 points to 21%, according to the latest YouGov poll released Friday, behind Labor by 33 points and the widest gap between the two parties since the 1990s. The support rate in Zhuohuisi dropped to 15%, and 65% of respondents felt the new prime minister was incompetent.

With the government’s popularity plummeting, Conservative MPs are worried about the general election just two years away. Some analysts believe that if the authorities do not clearly explain the policy this weekend, particularly how to reduce the deficit rate, the annual conference of the Conservative Party’s 4-day party starting on Sunday will be very difficult for Zhuo Huisi and Guan Haoting. the party.

Source: full report


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