Fiscal Policy

Own goals in HM Treasury's latest budget will add a percentage point to the inflation rate from April and force the taxpayer to cough up nearly an extra £5 billion of funds to cover the resulting increase in debt interest costs for the subsequent year even without any impact on Bank of England (BoE) interest rate policy.

UK tax rises are "significant enough to slow the economic recovery next year" - Pantheon Economics.

The UK Treasury said in its 2021 budget it would raise corporation taxes for the first time in 40 years in 2023 as it seeks to boost government revenues in order to shore up its finances following the huge expenditure on cushioning the blow of the covid-19 lockdowns.

The British Pound went higher against the world's major currencies following the announcement of the UK government's spending and tax plans on Wednesday, with economists saying the measures are likely to boost the economic recovery.

Pound Sterling remains on track to extend higher against the Euro courtesy of a relatively well received 2021 budget, the UK's vaccine advantage and broadly stable global equity markets.

The British Pound held onto gains against the Euro, Dollar and the majority of the major currencies following the 2021 budget announcement, which saw the negative impact of a tax rise on businesses cushioned somewhat by other pro-business initiatives.

The self-employed "badly need support" not a "crippling" tax raid says organisation representing independent professionals and the self-employed.

Economist warn the UK Treasury could risk derailing any post-covid economic recovery by raising taxes and slashing spending in a quest to rebalance the country's books.

Outlook for the British Pound has improved notably on the back of the planned fiscal expansion announced by the U.K.'s Treasury.

The outlook for the U.K. economy has improved in 2018, according to the latest round of Office for Budget Responsibility (OBR) forecasts, suggesting the lacklustre growth rates seen earlier in the year won't be repeated going forward. 

Growth forecasts for the U.K. economy in 2019 have been upgraded by the Office for Budget Responsibility announces Chancellor Philip Hammond however Sterling will await clear progress in Brexit negotiations before pricing in the good economic news.

The British Pound is flat ahead of the week's key event - the 2017 budget announcement. We consider the issues to watch and potential reactions by Sterling.