Sterling falls, government borrowing costs rise as Rishi Sunak delays budget

The a pound down slightly against the dollar after the chancellor Jeremy Hunt announced the planned Halloween budget will be moved to November 17.

The cost of government borrowing also slightly increased after the reversal of the statement, which Rishi Sunak said he envisions “difficult decisions” that he hopes will stabilize Britain’s “economic crisis”.

Sterling rose sharply against the dollar in early trading in London, but recovered slightly after the delay was announced. However, the pound remains 0.84 percent higher at $1.156 against the US dollar for the day.

Meanwhile, yields on UK government bonds, known as gilts, rose slightly. The yield on 30-year gilts, which increases as prices fall, rose 0.1 percentage point to 3.76 percent.

Mr Hunt, who has retained his role as chancellor following Mr Sunak’s cabinet reshuffle, said the delay ensured the Treasury watchdog, Office of Budget Responsibility (OBR), will be able to make the “most accurate” predictions possible.

The statement has also been turned into a full autumn statement, which shows it will highlight how important departmental budgets with imminent cuts will be dealt with.

Mr Hunt said: “We now have a new prime minister and the prospect of much more long-term stability for the economy and the country.

“In that context, a short delay of two and a half weeks is the best way to make sure we make the right decisions.”

The chancellor added: “The OBR also want to make sure their forecasts are as accurate as possible and even in the last 48 hours there has been a lot of change.

“And that’s my recommendation to the prime minister as the best way to make sure that the decisions that we make – these very, very difficult decisions – stand the test of time and give us the best chance to keep people safe. mortgages, their jobs, cost-of-living issues that everyone has.”

IMF chief Kristalina Georgieva said she expected Mr Sunak to guide Britain to financial sustainability, adding that he was right to warn the public of tough decisions ahead.

She welcomed what she said was Mr. Sunac’s clarity and constructive stance during his tenure as chancellor.

“The new prime minister comes with a platform that he has shaped during his time as chancellor, which is that he is very prudent about bringing financial discipline to the UK,” Ms Georgieva said.

“I listened carefully as he spoke to the British people and this is a message that needs to be heard around the world. These are tough times, and tough times call for tough decisions.”

After Mr Sunak replaced Ms Truss as prime minister on Tuesday, the pound rose to its highest level since before his predecessor’s disastrous mini-budget. Sterling rose 1.9 percent to US$1.149 after the former chancellor took 10th place on Tuesday.

Meanwhile, the yield on the 30-year note, which measures the interest the government pays on some of its borrowings, was 0.1 percentage point lower at 3.65 percent.