On Monday a Financial Times headline asked the question "Is Britain now in a full blown economic crisis?". It was in response to the carnage we've experienced in investment markets over the last week, triggered by the current government's mini-Budget statement.
On 23rd September 2022, a day after the Bank of England once again raised its base rate by 0.5%, Chancellor Kwasi Kwarteng set out a plan for the biggest wave of tax cuts in 50 years. These included changes to national insurance, income tax and even stamp duty. This wave of tax cuts came hot on the heels of the energy price guarantee announced weeks earlier. But it was the scale of the tax cuts, which would need to be funded by increased government borrowing, in the absence of a corresponding cut in spending, that shook markets.
The chart below shows how the value of the pound crashed to a new all-time low against the US dollar.
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