Authors: SOFÍA GROIZARD, MARIAN OLIVERAS and JOSEP SABATÉ
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This article examines how the UK, a prosperous country, became involved in an unstable economic and financial situation, and explores the causes of the fall in the exchange rate and the rise in interest rates and their effect on the yield curve. The analysis takes a macroeconomic perspective and focuses on Truss’s impact on the United Kingdom. The report reviews the condition of the UK economy before Truss’s entry, her fiscal plan, and the roots of her policies. It then delves into the Truss cabinet’s intention with its trickle-down policies, historical evidence of their success in the past, and their expected developments today. The study also considers the reasons for
the distancing of financial markets, including the role of expectations and uncertainty. Finally, the article explores Rishi Sunak’s U-turn, the Bank of England’s intervention, and a potential solution to trickle-down economics.