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British economy going down the slope, pound sees lowest level, bonds sinking


The UK is going through the worst financial crisis in years. The government seems to have lost complete control of the country's economy. British pound has fallen to the lowest level as against US dollar, while its bonds are plummeting. 

The UK government announced this Friday - "Mini Budget" - 45 billion pound of unfunded tax cuts. This is being criticised by the financial experts as an irresponsible move that can weaken the overall economy.  Even International Monetary Fund has slammed the government's plans stating, “will likely increase inequality.”  

This crisis has definitely caused a shameful and embarrassing situation for the new government, which is just few weeks old, headed by Ms Liz Truss. She was elected as the new Prime Minister defeating a promising leader Mr Rishi Sunak. 

There is a big question mark on whether Truss-led government is even serious about the financial well being of the country. Their announcements of policy reforms and income tax cuts show less credibility about their intention to revive the British economy. They are now considering benefit cuts for the citizens and cost cuts for various government departments. 

The Bank of England intends to buy many long-term government bonds to counter recent financial slide. But on the other hand, it looks like the central bank will have no choice, but to raise the interest rates more aggressively. This could lead to higher cost of living, less demand for houses, leading a downward journey for the whole of economy. This could mean an inevitable recession, which could last little longer than expected.   

Amidst the soaring burrowing costs, will the British government be able to restore its credibility and convince the world that things are under control back home?

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