According to CCTV News, on September 223, the British government announced a series of economic stimulus measures, including large-scale tax cuts and the lifting of the banking industry bonus ceiling, hoping to boost the British economy, which is about to fall into recession.
British Chancellor Kwoten explained in the lower house of the UK Parliament on the 23rd that the British government plans to "expand the economic supply through tax incentives and reforms."
According to the content announced by Kwoten, the tax reduction measures introduced this time involve personal income tax , property tax, shopping consumption tax for overseas tourists and corporate tax. The UK government estimates that tax cuts will cause a reduction in fiscal revenue, and expects to reduce taxes by £45 billion by the fiscal year 2026-2027.
In addition to tax cuts, other economic stimulus measures include: lifting restrictions on banking bonuses, reducing restrictions on land use planning, and strengthening domestic infrastructure construction.
The British think tank Institute of Finance believes that the British government's tax cut is the largest and most radical tax cut in 250 years. It also marks a sharp change in the policies of the Trass government compared with the Boris Johnson government. Previously, the Johnson government implemented a policy of increasing tax revenue and expanding public spending.
Currently, the UK's economic growth is weak, coupled with the energy crisis and high inflation, which has led to rising cost of living and declining consumer confidence. Many market analysts believe that the UK economy will fall into recession before the end of this year.
After taking office this month, the new British Prime Minister Tras said he would promote growth through tax cuts and reforms to avoid a recession. Before announcing tax cuts on the 23rd, she had announced the relevant energy subsidy plan, and the government will spend £60 billion in the next six months to pay some of the energy costs for the people.
And there have been criticisms in the UK about this series of new policies of the government. Opposition Labor Party accused the government of "gambling at all costs" and warned that the combination of large-scale tax cuts and energy subsidy schemes would put Britain on high debt as interest rates rose.
Bank of England announced on the 22nd that it would raise the benchmark interest rate from 1.75% to 2.25%, This is the seventh time the Bank of England has raised interest rates since December last year. Exchequer Kwoten also had to announce that in order to ensure the implementation of the new policy, the target of issuing UK Treasury bonds this fiscal year will be significantly increased.
At present, the UK's economic growth is weak, coupled with the energy crisis and severe inflation, the cost of living for the people has increased sharply. Since last winter, the inflation rate in the UK has remained high, with April to July this year hitting 40-year highs.
pound hit a 37-year low. Will the pound fall to parity against the US dollar?
According to Shanghai Securities News , after the euro fell below parity this year, the market is paying close attention to whether the pound sterling can reach parity against the US dollar.
htmlOn September 23, the pound against the US dollar fell below 1.10 for the first time since 1985, and then fell below 1.09 and fell more than 3% intraday. On the same day, the pound against the US dollar fell to 1 to 1.0899, setting a new low in 37 years. html The yield on the 15-year UK Treasury bond once rose by nearly 60 basis points, the largest increase in history. The yield on the benchmark 10-year UK bond increased by more than 30 basis points in the day, and the trend will eventually hit the largest single-day increase. pound to US dollar trading history can be traced back to 250 years ago. At the beginning of this year, no one would think that the pound would be parity with the US dollar, but the market currently predicts that by the end of this year, there is a considerable probability that investors will "witness history." As the threat of the UK economic recession approaches, the surge in debt costs, and the possibility of limiting independence of the Bank of England, parity between the pound and the dollar has gradually become a possibility.
On Friday, the pricing of the options market showed that the historic event of pound falling to parity against the US dollar was 26% likely to occur in the next six months, compared with only 14% a day ago.
It is too early to end the tide of tightening, and the world is in a "great transition period"
According to the 21st Century Business Herald, the wave of tightening in Europe and the United States in the era of high inflation is getting worse, the outlook for economic growth is dark, and the global market continues to be under pressure.On September 24, Michael Strobaek, global chief investment officer of Credit Suisse Group, said at the "Global Wealth Management Forum 2022 Autumn Summit" that the global economy of has been slowing down, but inflation is still high, and the market has been greatly affected.
(Michael Strobaek, Global Chief Investment Officer of Credit Suisse Group)
What's worse is that the adjustment of asset prices may not be over.
Strobaek warned that rising interest rates will have a negative impact on asset prices. We believe that this stage has only half passed. It is very likely that it will take a long time for the central banks to slow down or stop the tightening of the policy. Global economic growth will slow down in 2023. Under the influence of the Russian-Ukrainian conflict, Europe is in a particularly difficult situation and will be the first to enter the recession cycle.
In Strobaek's view, the world is in a "great transition period". Not only will the economic order be reshuffled in 2022, but the order in geopolitical aspects is also changing rapidly. The two are closely connected, and economic and geopolitics cannot be separated.
How to find certainty in an era of uncertainty? Strobaek believes that although many asset classes with strong liquidity are under obvious pressure, sustainability-related investments have gained more attention and this is a long-term trend. Global warming may become a long-term phenomenon. In Europe, we have clearly seen the various impacts of climate change, including drought, extreme high temperatures, floods, etc. The risks brought by climate change are becoming increasingly obvious.
In terms of energy transformation, the Russian-Ukrainian conflict has affected efforts to develop sustainably and energy prices have soared. Strobaek reminds that this change can also be regarded as a catalyst for future sustainable development, and the energy transformation is more urgent.
Looking ahead, Strobaek suggests that asset management institutions need to diversify their assets, advance their investment portfolios to the perspective of ESG and sustainable development, and respond to the impact of climate change. ESG investment will be a long-term concept, not a flash in the pan.
"Super Central Bank Week" ends, what is the impact?
According to Wind, the USD index rose strongly this week, with stock markets, commodities, and non-US currencies generally falling . On Wednesday, the Federal Reserve raised interest rates by 75 basis points, and hinted that there will still be a sharp increase in the last two meetings this year. The Fed has raised interest rates by 75 basis points for the third consecutive time, and has raised interest rates by 5 times this year, a total of 300 basis points, which is the Fed's most radical monetary tightening action since 1990. The
dot chart shows that future interest rate hikes are more radical than expected, and it is expected that the fund rate may be raised to the high of 4.6% by early next year.
chart: Fed rate hike dot chart, source: Fed
Stock market
As of the week ending September 23, most major global stock indexes fell.
Among them, Venezuela IBC performed the best, up 2.25% to 8815.84 points; Brazil IBOVESPA performed second, up 2.23% to 111716.00 points; Russia MOEX performed the lowest, down 14.18% to 2089.87 points; Austria ATX performed poorly, down 6.28% to 2731.46 points.
Commodities
As of the week ending September 23, most major international commodities fell. Among them, ICE orange juice performed the best, up 6.43% to 181.9 cents/pound; ICE coffee performed second, up 2.32% to 223.5 cents/pound; NYMEX natural gas performance was the bottom, down 11.89% to , 7.19 million British thermal units; CME wood performed poorly, down 9.60% to 460 US dollars/kfoot.
Foreign exchange
As of the week ended September 23, the US dollar index rose strongly, and the US dollar rose against most currency pairs. Among them, the US dollar performed the best against Swedish Krone , with a cumulative increase of 4.77% to 11.2965; the US dollar performed second against Norwegian Krone , with a cumulative increase of 3.98% to 10.604; the pound sterling was at the bottom against the US dollar, with a cumulative decrease of 5.05% to 1.0844; the pound sterling performed poorly against the Hong Kong dollar, with a cumulative decrease of 5.04% to 8.5119.
Source: 21st Century Business Herald (Reporter: Wu Bin Editor: Li Yingliang), CCTV News Client, Shanghai Securities News, Wind
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Editor of this issue Jiang Peipei Intern Mei Lexuan
