4 October 2022

Is the British Economy in a Doom Loop?

Cameron Abadi

When the government of British Prime Minister Liz Truss unveiled the details of her first budget one week ago—with a major tax cut for the country’s highest earners at its center—panic ensued: Britain’s currency fell in value to historic lows, the interest rate on government debt increased, and the Bank of England was forced into emergency action to purchase government bonds. British financial markets have lost a total of $500 billion in just the first three weeks since Truss took office, and observers around the world have wondered whether this could be the start of an international crisis.

Should Truss have seen this coming? Do Britain’s economic policymakers have any good choices left? And is this not just a crisis, but the start of a new era in international economics?

Those are some of the questions that came up in my conversation this week with Foreign Policy columnist Adam Tooze on the podcast we co-host, Ones and Tooze. What follows is a transcript of the interview, edited for clarity and length. For the entire conversation, subscribe to Ones and Tooze on your preferred podcast app.

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