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The FT’s quick guide to the UK fiscal statement

UK chancellor Kwasi Kwarteng declared a “new era” of growth with the announcement of his fiscal package on Friday. The set of tax cuts, worth £45bn, were the biggest since 1972.

However, the plan will also push up public borrowing at a time when interest rates are rising and the economic outlook is deteriorating. After his announcement, sterling fell to its lowest level since 1985 and gilt yields jumped, reflecting investor nervousness around the measures.

Tax cuts

  • The set of tax cuts will cost the economy £45bn by 2026-27, the equivalent of 1.5 per cent of gross domestic product

Bankers’ bonuses

Strikes

Investment zones

  • Tax incentives and liberalisation of planning regulations for about 40 so-called “investment zones

  • Government announces discussions are already taking place with Tees Valley, West Midlands, Norfolk and the West of England

Markets reaction

  • Sterling slipped 3 per cent to $1.09 on Friday morning after the announcement — its lowest level since 1985

  • The pound also dropped as much as 1.7 per cent against the euro to €1.123

  • The yield on UK government bonds rose sharply together with expectations of interest rate rises

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