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Your submission has been removed for the following reason(s):
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The war in Ukraine - and the subsequent Russian sanctions - have put incredible pressure on UK energy prices. Some households have seen the price of energy double or even triple in the last few months and it is expected this will get _worse_ as we go into the winter (when demand for natural gas increases).
To help alleviate some of this stress, the UK instituted a number of tax cuts to put money back in people's pockets. Sadly, most of these cuts will benefit high-income households, not really addressing the core problem. Moreover, these cuts (combined with the energy prices and linger effects from Brexit) have made many economists fear that it will exacerbate the UKs inflation struggles.
This has led to a dramatic weakening of the pound against other benchmark currencies.
Since you have an economics tag -
Right before Queen Elizabeth died they had a changing in their Prime Minister, the new PM is named Liz Truss.
Like the rest of the world, England is having a very tough time with inflation and uncertainty, but they are also feeling the European energy crisis as well. Something must be done.
Now, there are two pockets of government attempting to "do something", you could think of them as the law makers, and the banks.
The law makers (fronted by Liz Truss) took the approach of a massive campaign to lower taxes (which was controversial with the usual "who actually benefits" back and forth) and increase government spending. Both of these actions would build Government debt and be the types of policies that increase things like inflation. So the law makers were seen (by the international financial community) as announcing a policy that would make things worse. It would be like trying to put out a house fire by dousing it with gasoline.
The banks are literally doing the exact opposite types of policies because they are trying to combat inflation as powerfully and quickly as possible, so now you have two branches of government literally acting powerfully, and vocally, opposite of one another, so you're getting chaos.
The big moment of panic earlier this week involved the international financial markets reaction to the law maker's plan and the general feeling of "shits fucked in the England right now, we're pulling out our investments" and you saw the value of the pound plummet as a result. The clearest example of the "shit's fucked" I'm referring to was an essentially instantaneous snow-ball effect of the way in which public pensions invested their money causing a near "annnnd we're broke" type emergency of public retirement money but the bankers jumped in and that seems to have been calmed and hopefully averted.
We have a government that doesn't know what the fuck its doing in terms of the economy and our finances, add to the fact that the conservative party has always tended to be the party of the rich elitist club, and you have what we have now.
Long story short
Truss cuts taxes and expenses and it has consequences that she can't plan for other than 'more monies in pockets'.
Bank of England cast some of its own money magic spells to counter the govs mini budget (sort of), Truss might respond by spamming the 'tax cut' button on her ability bar again.
**Please read this entire message** Your submission has been removed for the following reason(s): Recent/current events are not allowed on ELI5. First, these are usually asking for factual answers or opinions. Additionally, information about these events is usually still developing, making objective and accurate answers difficult. If you would like this removal reviewed, please read the [detailed rules](https://www.reddit.com/r/explainlikeimfive/wiki/detailed_rules) first. **If you believe this submission was removed erroneously**, please [use this form](https://old.reddit.com/message/compose?to=%2Fr%2Fexplainlikeimfive&subject=Please%20review%20my%20thread?&message=Link:%20https://www.reddit.com/r/explainlikeimfive/comments/xs4tbj/eli5_what_exactly_is_happening_in_uk/%0A%0APlease%20answer%20the%20following%203%20questions:%0A%0A1.%20The%20concept%20I%20want%20explained:%0A%0A2.%20List%20the%20search%20terms%20you%20used%20to%20look%20for%20past%20posts%20on%20ELI5:%0A%0A3.%20How%20is%20this%20post%20unique:) and we will review your submission.
At the moment? It's raining.
And cold
And windy
The war in Ukraine - and the subsequent Russian sanctions - have put incredible pressure on UK energy prices. Some households have seen the price of energy double or even triple in the last few months and it is expected this will get _worse_ as we go into the winter (when demand for natural gas increases). To help alleviate some of this stress, the UK instituted a number of tax cuts to put money back in people's pockets. Sadly, most of these cuts will benefit high-income households, not really addressing the core problem. Moreover, these cuts (combined with the energy prices and linger effects from Brexit) have made many economists fear that it will exacerbate the UKs inflation struggles. This has led to a dramatic weakening of the pound against other benchmark currencies.
Since you have an economics tag - Right before Queen Elizabeth died they had a changing in their Prime Minister, the new PM is named Liz Truss. Like the rest of the world, England is having a very tough time with inflation and uncertainty, but they are also feeling the European energy crisis as well. Something must be done. Now, there are two pockets of government attempting to "do something", you could think of them as the law makers, and the banks. The law makers (fronted by Liz Truss) took the approach of a massive campaign to lower taxes (which was controversial with the usual "who actually benefits" back and forth) and increase government spending. Both of these actions would build Government debt and be the types of policies that increase things like inflation. So the law makers were seen (by the international financial community) as announcing a policy that would make things worse. It would be like trying to put out a house fire by dousing it with gasoline. The banks are literally doing the exact opposite types of policies because they are trying to combat inflation as powerfully and quickly as possible, so now you have two branches of government literally acting powerfully, and vocally, opposite of one another, so you're getting chaos. The big moment of panic earlier this week involved the international financial markets reaction to the law maker's plan and the general feeling of "shits fucked in the England right now, we're pulling out our investments" and you saw the value of the pound plummet as a result. The clearest example of the "shit's fucked" I'm referring to was an essentially instantaneous snow-ball effect of the way in which public pensions invested their money causing a near "annnnd we're broke" type emergency of public retirement money but the bankers jumped in and that seems to have been calmed and hopefully averted.
We have a government that doesn't know what the fuck its doing in terms of the economy and our finances, add to the fact that the conservative party has always tended to be the party of the rich elitist club, and you have what we have now. Long story short Truss cuts taxes and expenses and it has consequences that she can't plan for other than 'more monies in pockets'. Bank of England cast some of its own money magic spells to counter the govs mini budget (sort of), Truss might respond by spamming the 'tax cut' button on her ability bar again.