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UK’s Sunak gives budget update amid cost of living squeeze

© Reuters. British Chancellor of the Exchequer Rishi Sunak leaves Downing Street on the day of the Spring Statement, in London, Britain, March 23, 2022. REUTERS/John Sibley

LONDON (Reuters) – British Finance minister Rishi Sunak delivered a half-yearly update on his budget plans on Wednesday, cutting fuel duty and lifting the threshold for other taxes to help households through the biggest hit to living standards in decades



STOCKS: Main UK equity benchmarks were little changed after Sunak announced budget measures. The export-oriented FTSE 100 index remained near the session’s lows, down 0.1%, while the more domestically focused FTSE 250 fell 0.7%.

FOREX: Sterling pulled away from a near two-week high against the dollar, down 0.5% at $1.3198. Versus the euro, the British pound weakened 0.1% to 83.28 pence.

MONEY MARKETS: Bond markets held their expectations on the amount of rate hikes for the rest of the year, with traders expecting about 131 bps in cumulative rate hikes until end-2022.



“While the Chancellor can afford to tinker around the edges with fuel duty cuts and changing tax thresholds, all measures that will help to a degree, the fact remains that the government, like the Bank of England, is very much a prisoner of the events going on around them.

“They can temper some of the major pressure being brought to bear on householders, as flagged up in the morning’s CPI figures, but they cannot remove it entirely. Given Jerome Powell’s surprisingly optimistic take on the U.S. economy this week, it is not surprising that sterling is floundering against the dollar in the wake of Sunak’s statement.”


“While Rishi Sunak announced a number of welcome measures to help households cope with the cost of living crisis, these measures most likely will not go far enough to protect the consumer from a very challenging outlook. The rise in the National Insurance threshold and the cut in basic rate income tax at the end of this parliament will go some way to put more pounds in the pockets of voters ahead of the next general election, but it doesn’t necessarily help people with the here and now.

“With the war in Ukraine continuing to push up the oil price and utility bills due to rise sharply in the spring, and later in the year, inflation is beginning to bite for businesses and households.”

UK’s Sunak gives budget update amid cost of living squeeze

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