The UK Should Be Worried About Emerging Market Comparisons
The pound has been hammered by Truss’s radical approach. It may be left to the central bank chief to step up and be the adult in the room.
What a mess.
Photographer: Jose Sarmento Matos/BloombergThe nosedive in the pound and the UK government’s pursuit of policies to spur an economy beset by surging prices have prompted scathing comparisons between Britain and emerging markets. Bank of England Governor Andrew Bailey and the independent central bank may be all that prevents this unflattering label from sticking.
The pound fell to a record low against the dollar Monday after Chancellor of the Exchequer, Kwasi Kwarteng, vowed to press on with more tax cuts, despite a rout Friday in sterling and UK debt. Nothing wrong with aspiring to growth; a recession is widely predicted. But the selloff has been driven by the radicalism of the fiscal plans, including the biggest tax giveaway in half a century. This at a time when the dollar is ascendant against almost anything.