It has been a hell of a week for the United Kingdom.
Barely four days after the Queen’s funeral, the government—itself only two weeks old—announced the most significant tax reductions in 50 years. What happened next took most people by surprise.
Key takeaways:
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In the medium run, the UK’s new policies will cause annual borrowing in 2026 to stand at £114 billion, compared with the £32 billion that was previously forecasted.
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Markets have responded to the new policies by selling the pound and pushing the cost of UK government borrowing up, treating the UK economy like an emerging market.
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The UK’s story highlights how markets respond to irresponsible fiscal policies. A path Nigeria’s current government has been going down.
In the aftermath of the UK’s “mini-budget” (which was not mini at all), the British pound dropped as much as 7%. At one point, it reached its lowest level ($1.03) against
