The UK government’s decision to implement the biggest tax cuts in 50 years while borrowing tens of billions of dollars to subsidize soaring energy costs this winter is a massive gamble that’s sent shockwaves through financial markets. | Analysis
The UK government’s decision to implement the biggest tax cuts in 50 years while borrowing tens of billions of dollars to subsidize soaring energy costs this winter is a massive gamble that’s sent shockwaves through financial markets. Since Friday, when finance minister Kwasi Kwarteng formally announced the plans, the British pound has plunged 5% against the US dollar, bringing its total losses so far this year to an eye-popping 21%.
“The surge in interest rate expectations has already added another £1,000 a year to the coming increase in mortgages for a typical borrower, while sterling’s fall means more expensive imports feeding through to higher inflation,” said Bell. People living in the United Kingdom would see a decline in living standards as a result, he added.
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