Why Kwasi Kwarteng’s mini-budget could spark a UK economic crisis: Planet Money : NPR

Stephen Rousseau/Getty Images

Stephen Rousseau/Getty Images

A lot has been going on in British politics. They are still dealing with the aftermath of Brexit. King Charles III took the throne after Queen Elizabeth II died. Boris Johnson resigned after months of scandal and controversy, and Liz Truss became the new Prime Minister. It feels like a generational change has happened in the last month alone.

The possibility of a financial crisis loomed last month when Truss’s new finance minister, Kwasi Kwarteng, announced a series of unexpected tax cuts. At a time when the British economy was already facing 9% inflation, the market reacted violently to the plan to stimulate consumption. So violent was the reaction that the pound plummeted and interest rates soared.

So how did the UK end up in this situation? Today’s programme tells how the UK triggered a mini financial crisis by passing a mini budget.

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