Investors flee as UK bets the lot on tax cuts, massive borrowing

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The pound plummeted and bond yields went into freefall as the new British government unleashed huge tax cuts not seen since the 1970s.

| Britain’s new finance minister Kwasi Kwarteng unleashed historic tax cuts and huge increases in borrowing on Friday in an economic agenda that floored financial markets, with sterling and British government bonds in freefall.

Kwarteng’s announcement marked a step change in British economic policy, harking back to the Thatcherite and Reaganomics doctrines of the 1980s that critics have derided as a return to “trickle down” economics. The government said raising Britain’s annual economic growth rate by 1 percentage point over five years - a feat most economists think unlikely - would increase tax receipts by around the same amount.

Much of the decline reflects the US Federal Reserve’s rapid interest rate rises to tame inflation - which have sent markets into a tailspin - but some investors have taken fright at Truss’s willingness to borrow big to fund growth.

Source: Loan Digest (loandigest.net)

 

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So if the workers aren’t servicing the debts who does 😂

Meanwhile in Australia, the new Labor “government” is going to raise taxes and hold down productivity and personal spending

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