London:
On September 23, the Liz Truss government announced a set of economic measures aimed at spurring growth in the UK’s ailing economy through steep tax reductions, energy price caps for households and a relief scheme for businesses.
The ‘UK Growth Plan’ set a target of 2.5 per cent trending growth rate which the government believed would lead to greater economic opportunities, higher wages and sustainable finance for public services in the UK.
The unaccounted cuts to taxes estimated to cost the government a loss of £45 billion in revenue raised fears of an imminent public debt crisis among investors in the gilts market, triggering a massive sell off of government bonds. Investor confidence ebbed away as yields on long dated securities soared to dizzy heights and the sterling plummeted to a 40 year low of 1.07 to the US dollar.
Evidently, the Growth Plan came at a complex time when the country was reeling under a severe energy crisis after Russia cut off gas supplies to all of Europe. The Bank of England had already raised interest rates seven times in less than a year in its efforts to contain price rise, bringing rates at par with levels seen during the 2008 Global Financial Crisis.