The pound suffered yesterday and is still struggling this morning against both the euro and the dollar after the UK government announced a new 1.25% health and social care tax, designed to raise £12bn a year.
Economists worry that this rise will hamper the UK’s economic recovery from the pandemic, which has caused sterling to weaken. MPs are due to vote on the tax hike later today and Labour leader Sir Keir Starmer has described the plan as a “sticking plaster”.
It’s a different story for the euro. The single currency strengthened yesterday after positive data showing that the European economy grew in the second quarter of this year. This comes ahead of the European Central Bank’s monetary policy meeting tomorrow.
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