"Amorphous markets" vs Reaganomics (or, why the GBP is falling)

Britain's new Prime Minister, Lizz Truss, and Minister of Finance, Kwasi Kwarteng, took a big macroeconomic policy idea last week and built their mini-budget on it. The idea comes from Supply Side Economics and the era of Reaganomics. Their target is 2.5% economic growth over the medium term and the plan is to stimulate the economy with tax relief and deregulation. The more than ₤100 billion stimulus package consists of tax relief of ₤45 billion together with a ₤60 billion energy emergency package which should bring relief to households from the rising cost of gas. Everything is financed with debt. Only time will tell whether it will work, but how things play out over the long term can easily be forgotten if costs over the short term are too high. The markets do not like the plan. * The Economics Minute is supported by the NWU Business School.