Fed’s Bostic: UK tax cuts increase risk of global recession

The UK government’s new fiscal plan increased economic uncertainty and raised the concerns of a global recession, a top official at the US central bank warned after the pound sterling touched an all-time low.

Raphael Bostic from US central bank’s Atlanta branch has warned of ‘uncertainty’ after the British pound touched record low.

The Bank of England and UK ministry of finance are struggling to calm market’s sense of crisis urmoil after the pound hit a record low against the dollar as investors and traders digested UK’s minister of finance Kwasi Kwarteng’s £45 billion tax-cutting package.

Asked whether the plan and resulting volatility would increase the chances that the world economy tips into recession, Bostic said: “It doesn’t help.” “A basic tenet of economics is more uncertainty leads to less engagement by consumers and businesses,” he said. “The key question will be, what does this mean for ultimately weakening the European economy, which is an important consideration for how the US economy is going to perform.”