By Munachimso Obienyi
Following Liz Truss’ resignation as the Prime Minister of the United Kingdom, the pound rose against the dollar government borrowing costs dipped.
Ms Truss announced her resignation on Thursday during a press briefing outside Downing Street.
Government borrowing costs had risen sharply last month after the government promised huge tax cuts in its mini-budget without saying how it would pay for them.
But these costs fell back after the Bank of England stepped in with an emergency support programme, and after Jeremy Hunt reversed nearly all the mini-budget measures when he became chancellor.
Mr Hunt is due to announce plans for spending and tax on 31 October in his economic plan, which the Treasury confirmed was set to go ahead.
Hence, investors reacted to Prime Minister Liz Truss’s resignation as the pound hit N847/£1 at the parallel market while it stood at N491/£1 at the Central Bank of Nigeria (CBN)’s rate.
Reacting to the development, the Chief UK economist at Capital Economics, Paul Dales, said, although the resignation of Liz Truss as Prime Minister leaves the UK without a leader when it faces huge economic, fiscal and financial market challenges, the markets appear to be relieved.
He added that her resignation was a step that needed to happen for the UK government to move further along the path towards restoring credibility in the eyes of the financial markets.
“But more needs to be done and the new prime minister and their chancellor have a big task to navigate the economy through the cost of living crisis, cost of borrowing crisis and the cost of credibility crisis”, he said.
