New UK Prime Minister Liz Truss introduced a massive tax cut package — and triggered a currency crisis.
This week, the UK had its most dramatic currency crisis in recent memory. That’s on top of staggering inflation that the Bank of England has yet to significantly curb and a cost-of-living crisis. The situation in the UK sent global financial markets into a tailspin. Though the present crisis has been driven by a combination of factors, including the economic fallout of Brexit, Prime Minister Liz Truss’s recent package of tax cuts has helped push theUK’s economy into chaos.
On September 23, Truss’s Chancellor of the Exchequer, Kwasi Kwarteng, introduced the UK’s biggest tax cut in 50 years, estimated to amount to about 45 billion pounds over five years. The so-called “mini-budget” proposed tax cuts for the UK’s highest earners, and announced a rollback of corporate tax hikes and a cost increase for national insurance, both intended to go into effect next year. Kwarteng and Truss’s plan also slashes the stamp tax, a duty on land sales in Britain and Northern Ireland, in a bid to increase home purchases.