Pound starts trading weaker on prolonged austerity threat

<p>Sterling is weaker in forex trading as the threat of prolonged austerity looms.</p>

The pound has started the week's trading on the back foot this morning (November 26th), as the threat of prolonged austerity dampens investor confidence.

According to the Institute for Fiscal Studies (IFS), the chancellor of the exchequer may have to find a further £11 billion in tax rises and cuts if the economy does not improve.

This is in addition to the £8 billion in reductions already open to debate.

As such, George Osborne may have to extend the squeeze on public expenditure until 2018 to accommodate these savings and the IFS has warned that the Conservative politician's next address on the state of the economy could bring about "more fiscal pain".

The chancellor will deliver his autumn statement next week (December 5th), with a spokesperson for the Treasury confirming the independent Office of Budget Responsibility will deliver its economic forecast at the same time.

At 08:40 GMT, the pound was weaker in trading with both the dollar and euro, sliding to £1 buying $1.601 and €1.235.

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