The unrest sparked condemnation in the US, bitter memories in Greece and interest among holidaymakers in Singapore Tuesday 27 September 2022 16.13 BST The international reaction to the turmoil in financial markets that sent the pound to its lowest level against the dollar has been devastating in terms of condemnation of the new government’s policies, and the surprise and shock centered particularly on the chancellor’s willingness to experiment with one of the world’s most stable economies. In the US, criticism came from former US Treasury Secretary Larry Summers, who took to Twitter to attack what he called “completely irresponsible UK policy”, while expressing surprise that markets reacted so quickly and harshly . He said that in itself indicates a loss of credibility. I was very pessimistic about the consequences of the UK’s completely irresponsible policy on Friday. But, I didn’t expect the markets to turn so bad so quickly. A strong tendency for long rates to rise as the currency falls is a hallmark of situations where credibility has been lost. — Lawrence H. Summers (@LHSummers) September 27, 2022 His long thread concluded with the grim prediction that the financial crisis in Britain would not only have an effect on London’s “sustainability as a global financial centre” but “could well have global consequences”. In the New Yorker, John Cassidy wrote that the crisis was all the more troubling for Britain as it came so soon after the death of Queen Elizabeth II, “their last link to a time when textbook maps showed large swathes of surface of the earth. dyed imperial red’. Now, he said, “they face a humiliating currency crisis.” He said the prime minister, Liz Truss, and her chancellor, Kwasi Kwarteng, had plunged Britain into a “good economic mess”. “The tragedy,” said Cassidy, “is that all of this is unnecessary. Although Britain has gone through many trials in recent years, it is the sixth largest economy in the world, has a stable political system and London is one of the world’s largest financial centers. If its government were even competent enough, the risk of an economic implosion would be minimal. Unfortunately, this basic civic requirement is not met.” In Ireland, commentators said the “British boom” had clearly backfired and urged the Irish government, which is due to unveil its own budget on Tuesday, to heed the lesson. “Ministers Paschal Donohoe and Michael McGrath have been handed a real-time report on exactly how not to do it,” the Irish Independent reported in an editorial. “Despite the significant weight of expectations, the 2023 budget must be grounded.” Additional spending and tax measures to cushion Irish households and businesses from rising prices are expected to cost around €11bn (£10bn) – but unlike its neighbour, Dublin has a budget surplus. The Irish Times reported that, learning from London’s experience, “the message the Budget sends must be one of stability and include a credible plan for public finances. There should be enough resources to respond to the immediate crisis – and leave room to adapt to conditions next year if necessary.” In Germany, London-based Frankfurter Allgemeine Zeitung economic correspondent Philip Plickert told readers that as “an economic and financial historian, Kwarteng should consult the history books once again to see how dangerous it may be a escalating twin deficit. Prime Minister Truss cannot afford a balance of payments crisis.” German Finance Minister Christian Lindner, meanwhile, told the same newspaper at an event he hosted on Monday afternoon that he would expect to learn lessons from what he described as the “major experiment” Britain had embarked on, he said, “putting its foot on the gas while the central bank hits the brakes.” Munich-based Süddeutsche Zeitung called the new policy a “reckless gamble”. “Such upheavals are more familiar in emerging markets, but not in a highly developed economy like Britain’s. After the end of Boris Johnson’s government an economic change of direction was expected, but so radical? Liz Truss bid farewell to one of the cornerstones of Conservative politics: she doesn’t give a damn about the state’s stable finances.’ Ulrik Harald Bie, writing for Denmark’s Berlingske, called the market reaction “swift punishment for a bad policy.” In Greece, the sterling crisis has evoked memories of the 2010 financial emergency, when rising borrowing costs raised the specter of a Greek financial meltdown as lack of confidence in the economy grew. Government insiders told the Guardian that the tax cuts outlined by the British chancellor were not only “stupid” but reminiscent of the populist policies of Syriza, the leftists voted in at the height of the crisis. “They make no sense either politically or economically,” said one well-placed official, expressing disbelief that Kwarteng had decided to ignore the budget projections. “It’s like there’s an element of the populism, the unpredictability and the unprofessionalism that we saw in Syriza for the Liz Truss government.” Greece came close to bankruptcy and expulsion from the Eurozone. But as in those roller-coaster days – and with more than two years to go before the UK general election – Greek analysts said it would be hard to predict what the end game would be. “Clearly Labor is on a landslide,” said the official, speaking on condition of anonymity because he did not want to speak unkindly of a government of a country with which Greece has traditionally had such strong ties. “But if there are two more years that this Britain has to go through a bungee jump, there will be rollercoaster days before it gets there.” In France, the run on the pound was a top story in the financial papers, with broadcaster France 24 referring to the Truss government’s mini-budget as “a stock market killing spree”, while newspaper La Croix wrote: “The unfunded spending by Liz Truss is sending the pound down… the jewel in the crown, the British pound, has lost its luster.’ Le Point magazine accused Truss of “losing control of the economy” and paving the way for a Labor government, while financial website Capital speculated: “How long [will] the decline, which has been vertiginous in recent days, continues?’ In much of Africa, the problems of the UK government and the pound have been relegated to specialist websites and business pages, although in South Africa the South African Broadcasting Corporation led the daily market update with news of the pound’s fall . However, there has been some positive coverage of the UK’s prospects, with one newspaper in Nigeria saying it continues to be a destination for would-be migrants. Vanguard called the UK “a friendly and safe place to live”, due to its ban on allowing citizens to arm themselves, which was “strictly taken into account by its conquerors”, and a “very stable economy”. Kwarteng’s tax cuts will prompt ‘significant’ rate hikes from Bank of England From a southeast Asian perspective, the crisis could be seen as a positive by those looking to holiday, shop, buy property or pay student fees in the UK, the Straits Times in Singapore wrote. This could now be a good time to visit the UK, the newspaper said, citing travel agency EU Holidays, which said it had seen inquiries for holidays in Britain rise by almost a third. “It’s the best time for people to go on holiday to the UK because this is the cheapest price ever – I’ve never seen the interest rate drop this low,” said Mohamed Rafeeq, owner of Clifford Gems and Money Exchange in Raffles City. mall. The fall in the value of the pound is also likely to be welcome news for many international students whose fees are due at this time of year. {{#heart}} {{up left}} {{Bottom Left}} {{up and right}} {{Bottom Right}} {{#goalExceededMarkerPercentage}}{{/goalExceededMarkerPercentage}}{{/ticker}}
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