Drop in pound accelerated when PM Liz Truss spoke to announce another embarrassing tax U-turn
14 October 2022, 15:43 | Updated: 14 October 2022, 16:42
The drop in the pound accelerated when Liz Truss she announced another U-Turn on tax cuts and dodged a question about her ability to continue as Prime Minister at a press conference today.
Sterling fell 1.2 per cent to $1.1187, while government bond yields, which had dropped earlier (reducing government borrowing costs) began to increase again.
However, the stock markets didn’t appear to be perturbed by her speech, with the FTSE 100 index climbing 87 points, or 1.3 per cent, to 6,938.
Ms Truss confirmed another humiliating U-turn on tax, as she reversed plans to reverse a proposed corporation levy rise.
The planned corporation tax increase from 19p to 25p next April, which was originally announced by then-chancellor Rishi Sunak and attacked by Truss during the leadership race, will be now be implemented.
Read more: Liz Truss 'will resign this afternoon or be gone within the next two weeks', says Andrew Marr
She accepted the need to change course, saying: "It is clear that parts of our mini-budget went further and faster than markets were expecting.
"So the way we are delivering our mission right now has to change."
After the announcement, the embattled PM took only four questions, sidestepping one from the BBC’s Chris Mason on whether she has the credibility to continue.
Shortly before her appearance in the Downing Street Briefing Room, it was announced that she had appointed Jeremy Hunt as Chancellor after sacking Kwasi Kwarteng.
