The pound fell to a fresh 37-year low against the dollar and UK borrowing costs surged to the highest in more than a decade as the government’s radical tax cutting agenda and borrowing bonanza risked losing the confidence of the financial markets.
Investors took fright at the prospect of unfunded tax cuts announced in the chancellor’s fiscal statement driving the pound to close to its weakest point since before 1985. Sterling declined 3.2 per cent against the dollar to as low as $1.0895 after chancellor Kwasi Kwarteng laid out tax cuts worth £140 billion to boost growth. The pound fell to as low as $1.05 in 1985 when the US was forced into an international currency depreciation pact.
The yield on benchmark UK 10-year bonds,