British Chancellor of the Exchequer's tax increase may increase fiscal loopholes

[UK Chancellor of the Exchequer Hunt raises taxes and cuts spending every year]

Hunter is currently expected to announce annual tax hikes and spending cuts totaling between £50 billion ($58.85 billion) and £60 billion. He is trying to plug a huge hole in the country's public finances, while reassuring markets of Britain's fiscal credibility following the chaos caused by former prime minister Truss' disastrous "mini-budget" at the end of September.

[UK debt interest payments rise by £22bn]

British Chancellor of the Exchequer Jeremy Hunt said in a speech in the House of Commons that compared with the previous year, the British government's expenditure on debt interest has increased by 22 billion pounds (about 185.2 billion yuan) in the past 12 months. , and the UK's current deficit rate is about 98%.

[Hunter appease the market may create a bigger fiscal hole]

Ruth Gregory, UK economist at Capital Economics, said if Hunt wanted to reassure markets he would have to announce early action in the form of massive fiscal tightening. This could deepen and/or prolong the recession, ultimately creating a larger fiscal hole. If he tries to minimize economic pain, he could roil markets and prompt another spike in gilt yields, which would also worsen public finances.

[The rebound of the pound and the dollar is affected by the selling of the dollar]

Sterling's rebound against the dollar was largely due to a broad-based sell-off in the greenback and a general sigh of relief following the release of weaker-than-expected inflation data in the United States. This could indicate that U.S. inflation has peaked. That, in turn, suggested that the Fed could consider slowing rate hikes, suggesting that a major support for the dollar for months was coming to an end, leading to a rebound in sterling against the dollar.

[Economists predict a bleak outlook for the future]

The UK's independent Office for Budget Responsibility (OBR) is due to release a long-awaited series of forecasts. Economists are expecting a similarly bleak outlook ahead, following the BoE's downbeat outlook a few weeks ago. The Deutsche Bank report said the OBR is likely to paint a picture of a deep and prolonged recession in 2023, with economic growth remaining subdued at least until 2025 and inflation expectations rising sharply to reflect a longer-lasting recession. Inflation. The Office for Budget Responsibility expects the country's tight labor market to recover slowly, with the unemployment rate rising to around 5.5%-6% in the next two to three years.

[The Bank of England allocates 45 million pounds]

Bank of England: Allocated 45 million pounds for the 6-month indexed long-term repurchase facility (ILTR). £45m was allocated for liquidity operations, matching the bank's bid.

[UK wage growth hits fastest pace in a year]

British wages rose more than expected in the quarter to September as businesses hired more people. Average weekly earnings, excluding bonuses, rose by 5.7% year-on-year, the biggest increase since August 2021, the ONS said on Tuesday. The growth rate was higher than the 5.5% that economists had expected.