Markets collapse in the UK due to tax reforms and possible recession

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The country ordered this week an interest rate hike of 50 basis points to contain inflation, while it seeks to finance the energy consumption of citizens and companies. The tax cuts announced this Fridaysuch as the reform of social assistance to set a minimum income, the reduction of benefits, the elimination of the cap on profits for bankers.

“The UK’s economic difficulties worsened in September, with a drop in business activity indicating the economy is likely to be in a recession,” Chris Williamson, an economist at S&P Global, said in a statement on Friday.

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The index, considered a barometer of growth and based on surveys of companies, stood at 48.4 in September. When it is below 50, it reflects a contraction in activity, which had already occurred in August (49.6).

“The rising cost of living, linked to the energy crisis, and growing concerns about the outlook are holding back demand and affecting production in proportions not seen since 2009,” Williamson said.

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The pound sterling loses 1.6% of its value against the dollar and stands at 1.1073.

The Bank of England also estimated on Thursday that the British economy would be in recession from the third quarter, which will not be confirmed before the publication of the figures, expected in November.

This announcement overlaps with the Government’s decision to spend 60,000 million pounds to contain the impact of the price of gas and electricity rates on families and businesses.

The country also announced this Friday that it will eliminate the limit on bonuses or bonuses for bankers, promising an ambitious agenda of deregulation of the London financial industry to boost growth. The cap caps bonuses at twice a banker’s basic salary, with shareholder approval, and was introduced in the European Union to curb excessive risk-taking after taxpayers had to bail out banks in the global financial crisis. .

Source: Ambito

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