UK is in chaos as government attempts to solve the country’s economic problems

• Liz Truss’ plan to cut taxes has sent shock waves through financial markets.
• Her government’s 45 billion pound ($48 billion) plan to slash taxes has caused the pound to plummet.
• The International Monetary Fund urges the government to “reevaluate” the plan.

Nobody told Boris Johnson’s successor that Britain was due a period of calm after his turbulent premiership. The country was already facing a slew of problems. However, the proposed solution by new Prime Minister Liz Truss has quickly thrown the economy into disarray, threatening both immediate and long-term consequences for many Britons.

Her Conservative government’s 45 billion pound ($48 billion) tax-cut plan, aimed primarily at the country’s highest earners, has sent shockwaves through financial markets, causing the pound to plummet and casting Truss’ political future into doubt just three weeks after she took office.

Following days of turmoil, the United Kingdom received a rare stinging rebuke from the International Monetary Fund, one of the world’s top financial institutions, which urged the government to “reconsider” a plan that could fuel already-rising inflation and increase economic inequality.

The Bank of England, the United Kingdom’s central bank, issued its own emergency intervention on Wednesday. It announced that it would purchase as much government debt as was required to restore stability.

The emboldened leader of the opposition Labour Party, Keir Starmer, has joined others in urging the government to address the crisis by recalling Parliament, which is currently in recess.

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Truss won the race to replace scandal-plagued Johnson by appealing to around 200,000 members of the ruling Conservative Party. She marketed herself as a free-market-loving heir to divisive former Prime Minister Margaret Thatcher, but recent polls show that the general public has not embraced her policy proposals, further weakening her position.

It all stems from her gamble to stimulate economic growth and avert what many experts predict will be a long recession, fueled by a harsh winter in which some families may struggle to pay for energy and food.

Beyond the halls of Westminster and the frantic trading floors of the City of London, the last week has left many Britons feeling increasingly pessimistic about the country’s future.

“There are many millions of people across the United Kingdom who will find this winter incredibly difficult financially,” Rebecca McDonald, chief economist at the Joseph Rowntree Foundation, a poverty-fighting charity, said. “These people had to listen to the chancellor cut taxes for the wealthy — it was incredibly difficult to hear.”

The market reaction to Truss’ plan sent government borrowing costs skyrocketing, which will almost certainly be met with higher inflation and interest rates, resulting in more expensive credit cards and mortgages — even threatening a subprime housing crisis if people can’t make payments. The plummeting pound will also raise the cost of everyday goods in the UK, as importers face spiralling costs.

The “mini budget” was not accompanied by spending cuts or a traditional independent cost estimate, which could have calmed market fears, if not public criticism of the government’s priorities.

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