Economic anarchy in the UK



PLANET MONEY
October 5, 2022

ALEXI HOROWITZ-GHAZI

MARY CHILDS Twitter

LISTEN· 21:3621-Minute 

Stefan Rousseau/Getty Images

A lot is going down politically in the UK. They're still dealing with the fallout of Brexit. King Charles III ascended to the throne after the passing of Queen Elizabeth II. And Liz Truss has become the new Prime Minister, following the resignation of Boris Johnson after months of scandal and controversy. It feels like an era's worth of change occurred within just the past month.

When Truss' new Finance Minister Kwasi Kwarteng announced an unexpected series of tax cuts last month, the potential for a financial crisis was added to the mix. The British economy was already facing 9% inflation, so markets reacted violently against this proposed jolt to spending. So violently that the British pound nosedived and interest rates went through the roof.

So how did the UK get here? On today's show, how one little mini-budget managed to kick off a mini-financial crisis.