In 2022, the UK experienced a significant financial crisis following Liz Truss's misguided fiscal policy of massive tax cuts funded by debt. Ignoring expert advice, this led to a rapid fall in the pound and soaring bond yields, jeopardizing pension funds. The crisis prompted Truss to reverse her decisions and dismiss her finance minister before resigning after only 45 days. This episode highlights the dangers of erratic fiscal strategies, illustrating a historical lesson that the US appears to be overlooking amid its own economic uncertainties.
In September 2022, new prime minister Liz Truss launched a tax cut plan funded by borrowing, ignoring warnings about potential disastrous consequences for the bond market.
The pound slid and bond yields soared, exposing vulnerabilities in pension funds that led to financial chaos, resulting in Truss's unprecedented resignation after just 45 days.
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