The 2023 Spring Budget has been announced, and with it comes an increase in corporation tax from 19% to 25%. Such a move brings fresh challenges for corporates across the country.

Depending on how the foreign exchange markets view the decision, we could see sterling strengthen or weaken.

Privalgo’s Sales Director Alex Everitt outlines the impact of the rise in corporation tax on the FX landscape: “The government’s decision to raise corporation tax may impact inflows of overseas investment, making the UK a less attractive place to operate.”

“While we expect the FX markets to be volatile as they weigh up the Budget, the long-term effects of a dip in investment may have negative consequences for the UK economy. This could present issues for the pound going forward.”

Economic events such as the Spring Budget are just one of many factors that can affect currency values. Businesses can mitigate the risks of currency fluctuations damaging their bottom line through strategic risk management solutions.

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