U.K.’s Sweeping Tax Cuts Send Pound Tumbling, Yields Higher

September 23, 2022

The government will cut payroll taxes, freeze corporate taxes, ditch a banker-bonus cap and spend billions to subsidize energy bills

How have China, Mexico and Greece handled inflation, and where does the U.S. fit in? WSJ’s Dion Rabouin explains.

Updated Sept. 23, 2022 1:14 pm ET

LONDON—The British government Friday unveiled the country’s biggest tax cuts since the early 1970s, a bold move aimed at kick-starting growth at a time of global economic turmoil but one which spooked investors and sparked the biggest one-day selloff of the pound since the pandemic roiled markets in March 2020.

The package of tax cuts, paired with subsidies for households and businesses to cope with a surge in energy prices, was aimed at boosting the flagging U.K. economy amid stubbornly high global inflation and growing economic gloom in Europe. Instead, it may have only added to global worries by causing a market backlash.