Is the British Economy in a Doom Loop?
The currency value has fallen to a historic low, but the bigger problem may be investors opting out of government bonds.
When the government of British Prime Minister Liz Truss unveiled the details of her first budget one week ago—with a major tax cut for the country’s highest earners at its center—panic ensued: Britain’s currency fell in value to historic lows, the interest rate on government debt increased, and the Bank of England was forced into emergency action to purchase government bonds. British financial markets have lost a total of $500 billion in just the first three weeks since Truss took office, and observers around the world have wondered whether this could be the start of an international crisis.
Cameron Abadi is a deputy editor at Foreign Policy. Twitter: @CameronAbadi
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