The GBP EUR exchange rate was -0.36% lower on Wednesday after UK inflation was seen hitting a 40-yr high. Inflation was seen hitting 9% in April, according to the Office for National Statistics. Britain now has the highest level of inflation amongst the larger European nations. The UK was also rattling feathers in the EU with plans to change parts of the Northern Ireland protocol.
The GBP to EUR touched 1.1900 in the previous day but has slipped to 1.1800.
UK inflation soars to a forty year high with fears for households
The pound sterling was lower on Wednesday as UK inflation surged to 9% year-on -year in the latest figures from the ONS. Economists polled by Reuters had pointed to a reading of 9.1%, up from 7.0% in March. Households are now facing the biggest cost-of-living squeeze since records began back in the 1950s. Consumer confidence in the country is also sinking towards all-time low levels.
Anti-poverty campaigners have now urged Chancellor Rishi to act now, with calls for an increase in welfare benefits.
“Sunak’s inaction will make an already desperate situation for many even worse,” said Rebecca McDonald at the Joseph Rowntree Foundation.
The Times newspaper has already suggested that the Chancellor is drawing up plans to slash taxes and increase heating benefits for homes by hundreds of pounds.
Bank of America has criticised the Bank of England (BoE) for not being clear enough in its response, which can leave it open to political attacks and leave the economy in a worse position.
“The BoE reaction function has become less transparent and monetary policy more at risk of perceived politicisation,” it said in a report. “As a result inflation expectations may be less anchored so we expect higher interest rate, growth and inflation volatility.”
UK inflames protocol tensions again with plans to override elements
Liz Truss has said that the relationship between Great Britain and Northern Ireland has been “undermined” by the Northern Ireland protocol as she announced the country’s plans to change parts of the agreement.
The foreign secretary told MPs in Parliament 78% of people in Northern Ireland thought the protocol needed to change, according to a December poll.
Maros Sefcovic, the European Commission vice-president in charge of Brexit negotiations for the EU, hit back at the Truss statement. He said that the EU still had a desire to reach a negotiated settlement with the UK over the Northern Ireland protocol.
Sefcovic said “the potential of the flexibilities” proposed by the EU have “yet to be fully explored,” despite months of negotiations already. But he also said that the UK plan to scrap parts of the protocol “raises significant concerns”. If the UK continues, Brussels will respond “with all measures at its disposal”, he added.
The UK foreign secretary has said the government is confident that any move to alter the protocol is legal, while adding that people in Northern Ireland are already facing higher costs from the current agreement.
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