Pound rises and borrowing costs fall as chancellor moves to calm markets

The pound rose and government borrowing costs fell on Monday, as investors welcomed the announcement by Chancellor Jeremy Hunt of the reversal of most of the mini-budget tax measures.

Sterling extended gains against the dollar, and is trading at around $1.14.

The news also saw the interest rate – or yield – on UK government bonds fall, making government borrowing less expensive.

However, analysts said tough decisions remained ahead on government spending.

An update to the government’s mini-budget had been scheduled for 31 October, but Mr Hunt brought forward many billions of pounds worth of tax and spending measures in a bid to reassure the markets.

The changes will see a planned cut in income tax scrapped, while a cap on energy bills that had been due to last two years is now only guaranteed until April next year, when it will be reviewed.


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