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Economics
The Big Take

The UK’s Crisis of Confidence Was Years in the Making

The UK thought it had the trust of markets — until it didn’t. Now homeowners and businesses will likely have to pay the price.

Liz Truss is preparing for her first speech to the Conservative Party conference as prime minister next week.

Liz Truss is preparing for her first speech to the Conservative Party conference as prime minister next week.

Photographer: Daniel Leal/AFP/Getty Images

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Britain is in a self-inflicted financial crisis, years in the making, that threatens to accelerate the economy’s dive into recession — and the country’s new prime minister is coming under intense pressure to blink.

In the week since the government unveiled the biggest tax cuts since 1972 with scant detail of how they will be financed, the pound has crashed to its lowest-ever level against the dollar, the cost of insuring British government debt against the risk of default has soared to the highest since 2016, and the Bank of England has been forced to intervene amid concerns about the nation’s pension funds.