Pound falls as Jeremy Hunt raises taxes in Autumn Statement: Sterling drops half a cent to below $1.18 against the dollar

• Jeremy Hunt has delivered his autumn budget statement to Parliament 
• The Chancellor announced a slew of tax rises and spending cuts in his speech
• The pound quickly dropped to below $1.18 as markets reacted to his statement 

The value of the pound has plummeted after Jeremy Hunt delivered his autumn budget statement which set out tax rises and spending cuts worth billions.

The pound fell to $1.18 after the Chancellor made his statement in Parliament, while government bond prices also fell.

Bond market losses were modest and UK markets appeared relatively calm in comparison to the sharp selloff triggered by Kwasi Kwarteng and Liz Truss’s disastrous mini-budget in September.

British banking stocks rallied, while shares in the power sector came under pressure after Hunt announced a windfall tax on oil and gas firms and extended it to power generation firms.

Chancellor Jeremy Hunt delivered his huge financial statement in the House of Commons

Britain’s economy is forecast to shrink next year, Mr Hunt said. He added that Britain will bring down its government debt as a percentage of economic output within five years under a new fiscal rule.

The Office for Budget Responsibility said the new government’s fiscal targets will be achieved, in a positive sign for bond investors.

Britain’s 10-year gilt yield, which moves up when the price moves down, was up just 2 basis points on the day at 3.16 per cent having traded at a 3.18 per cent just before Hunt started speaking.

Britain’s currency has recovered most of its value after crashing following the September mini-budget.

However, the pound took a dive during Mr Hunt’s statement in the House of Commons as fears grow the UK could be entering a long recession. 

The Chancellor is seeking to reassure the markets following Ms Truss’s tumultuous premiership by returning to a policy of fiscal conservativism.

However, the pound dropped against the dollar shortly after Mr Hunt began speaking in Parliament to $1.1808 before recovering.

It has not yet returned to its value when trading opened today at $1.1883. 

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