UK PM Sunak signs off on tax rises, GBP remains under pressure

The new Prime Minister for the UK, Rishi Sunak, is reported to be set to sign off on raising taxes across the board as the new British prime minister looks to plug a £50bn hole in public finances.

The Financial Times wrote in an article on Monday that Treasury insiders said that Sunak and chancellor Jeremy Hunt had agreed on Monday that while “those with the broadest shoulders should be asked to bear the greatest burden”, everybody’s taxes would go up.

the article reports that a Treasury official said after the bilateral meeting: “It is going to be rough. The truth is that everybody will need to contribute more in tax if we are to maintain public services.

“After borrowing hundreds of billions of pounds through Covid-19 and implementing massive energy bills support, we won’t be able to fill the fiscal black hole through spending cuts alone.”

The article states that the Treasury officials said there was an “eye-watering fiscal black hole”, as they attempted to prepare the public for tough economic news when Hunt delivers the Autumn Statement on November 17.

The UK political scene has been a major driver in financial markets of late. However, a new UK administration has brought more stability to the local bond and currency market.

With that being said, the economic slowdown and rising inflation pose ongoing risks to the pound which is down to the greenback by some 1.25% on the day so far. GBP/USD fell from a high of 1.1613 to a low of 1.1459.