This week’s Labour conference has given a taste of the will-they, won’t-they tax stories to come in the weeks ahead of November’s autumn budget.
With nearly two months to go until Chancellor Rachel Reeves details her plans for UK government taxes and spending, the news is filled with speculation of a tax on the gambling industry, a scrapping of the two-child benefits limit and numerous other schemes.
However, without certainty, the pound is in a precarious position. Just last week, we saw sterling plunge after the government was forced to sell debt at an increased rate, ramping up the cost of its long-term borrowing. Institutions with big pockets are clearly growing wary of investing in the UK and it’s hitting the pound’s exchange rate.
To secure certainty for your budget, lock in today’s GBP/EUR rate with a call to your account manager on 020 8003 4915.
It’s not all rosy over the Atlantic, however. After Democrat and Republican lawmakers failed to reach an agreement on the budget, the US government entered its first shutdown in seven years. Until a new budget is agreed, hundreds of thousands of federal workers will be put on furlough, while essential personnel, such as active servicepeople will be expected to work without pay.
A side-effect of the shutdown is US data-gathering departments, such as the Bureau of Labor Statistics, will stop their work, delaying reports, like this Friday’s employment numbers. At a time where the US may be in the thick of an employment crisis and the Federal Reserve is trying to use that information to decide whether to make further interest rate cuts, a shutdown causes massive uncertainty on the country’s economic future.
Meanwhile, in Europe, after its successes in getting inflation down to its 2% target, several European countries are seeing prices creep up again. Both France and Germany saw above-target inflation in the past month, increasing speculation on how the European Central Bank will respond.
With instability in the UK, US and the EU, it’s very difficult to predict what the currency markets will do from moment to moment, let alone month to month.
