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Is Britain’s ‘reverse economic policy’ as good for the United States as it looks right now?

With every up there is a down. When someone loses, someone often wins.

This week the UK economy was down, down, down and the Pound lost a lot of time.

In particular, it plunged against the dollar, losing as much as 5% on Monday and falling to $1.0327.

Experts noted that people would need a fairly good memory – and a certain age – to remember when things had been so dire; indeed, it was as bad as it has ever been since Britain passed decimilization in 1971.

In Britain, Prime Minister Liz Truss and Chancellor Kwasi Kwarteng, whose announcement of sweeping tax cuts they say will boost the economy, have been blamed for the fall in Britain’s perceived strength. United.

Mr Kwarteng has been accused of waging a ‘class war’ against Britain’s workers, with his plans to scrap the top tax rate of 45 per cent and cut National Insurance and stamp duty from a total value of £45 billion.

Mr. Kwarteng said his efforts would spur growth and energize the economy.

“This is how we will successfully compete with dynamic economies around the world,” Mr Kwarteng said, as he was accused of gambling with the nation’s future with his seemingly ideological background in the economy of the offer.

In a rare intervention, the International Monetary Fund urged Ms. Truss and Mr. Kwarteng to rethink. He warned: ‘The nature of the UK measures will likely increase inequality.’

If the losers are those in Britain who will not benefit from a huge tax cut, as well as a reputation for economic coherence, does it automatically follow that with its historically strong dollar, the winner is the United States and its citizens?

The answer, experts say, is yes. And not just on one point.

One obvious way is that for Americans wishing to travel to the UK, things will indeed be very cheap.

Bob Elliott, chief information officer of investment firm Unlimited, said The Independent“Certainly from an American perspective, travelers are going to see essentially the cheapest prices they’ve seen in dollars in a very long time and almost 20 years.”

He added: “And it will provide plenty of very affordable opportunities to travel around the UK and mainland Europe.”

The other side of the coin is that the cost to exporters will increase. Most exporters set their rate in dollars, so these costs will increase.

Gary Neville: Liz Truss ‘took the pound below my reputation at Liverpool’

Still, Mr Elliott said that given US concern over inflation, which currently stands at over 8%, and the Federal Reserve’s efforts to raise interest rates to try To counter this, the increased costs for exporters and the subsequent reduction in demand, will act to deflate the situation.

“One of the reasons the Fed isn’t so concerned about dollar appreciation is that it has inflation-fighting effects, which given that it’s focused today on inflation, is positive from his point of view,” he added.

The US dollar is not only strong against the pound. It is also strong against the euro and the yen.

Economists say the dollar is helped by the fact that it is seen as a safe haven for investors during turbulent times.

It is also helped by turbulence. As gasoline prices soared due to realistic inflation and sanctions against Russian energy imports, the United States also boosted domestic production and export of these products to countries in Europe. and elsewhere in the world.

Sales are in US dollars, so even if prices go up in the US, the big energy companies are seeing their profits soar.

In March, analysis by Global Witness, Greenpeace USA and Oil Change International suggested that high oil prices due to Russia’s invasion of Ukraine would net the U.S. upstream oil and gas industry a $37 windfall. to $126 billion in 2022 alone.

“It is clear that the energy system is deeply broken when the companies that are causing the climate crisis are the ones reaping the rewards of the bombings of hospitals and schools in Ukraine,” Murray said at the time. Worthy, Gas Campaigner at Global Witness. .

“Shoveling billions of dollars into the pockets of Big Oil will only lead to more fossil fuels. But to escape the crises of soaring energy prices, wars financed by the oil states and the climate emergency, we urgently need a world beyond fossil fuels.

Prime Minister Liz Truss holds a bilateral meeting with US President Joe Biden at the United Nations in New York

(PA wire)

There are other ways the weak British pound can hurt US businesses.

One of the downsides for US companies investing in Britain will be that while the price of items such as iPhones can remain the same in the UK, the cost in real terms to companies such as Apple, which measures always in dollars, will be considerably lower.

The scale of the problem, however, is not so great.

Barry Eichengreen, professor of economics at the University of California, Berkeley, said The Independent UK GDP was less than a tenth of US GDP and less than 3% of global GDP,

“So what’s happening in the UK in and of itself poses no first-order threat – economic, financial or otherwise – to the US,” he said.

“But the collapse of the pound and the Truss government’s topsy-turvy economic policy are contributing to the general sense of malaise in global financial markets that was already evident before last week, reflecting monetary tightening around the world, recession in Europe and China’s slowdown.”

He added: “This malaise and deteriorating global financial conditions can certainly affect the United States, and not in a good way. That is to say: what is happening in the UK is not helpful.


The Independent Gt

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