The pound is taking a pounding.
The British currency has plunged, sliding against the U.S. dollar to touch an all-time low. It’s a sign of the alarm in financial markets over new Prime Minister Liz Truss’ emergency budget measures unveiled last week aimed at jump-starting the ailing economy.
Investors are spooked by a sweeping package of tax cuts likely to cost tens of billions of pounds in extra government borrowing and amounts to a risky gamble to stave off a looming recession. Truss believes that tax cuts, especially for the wealthy, will encourage households to sock away more money, but that could result in lower consumer spending, which could hurt the U.K. economy, analysts noted.
“[E]ncouraging consumers to save more of their income and spend less risks suppressing demand to the extent that weaker growth deters the very investment the government hopes to encourage,” Nick Andrews, an analyst at Gavekal Research, noted in a…
