Former US Treasury Secretary Summers believes that the British government's tax cut plan is creating conditions for the pound to fall below parity against the dollar.

(File photo, Associated Press)

[Financial Channel/Comprehensive Report] The government of British Prime Minister Liz Truss launched a basket of economic rescue policies on Friday (23rd), including a 45 billion pound tax cut plan, but former US Treasury Secretary Lawrence Summers (Lawrence Summers) It is believed that this plan is creating conditions for the pound to fall below parity against the dollar.

"Bloomberg" reported that Summers said that Britain's behavior is a bit like an emerging market turning itself into a submerging market.

He also pointed out that after Brexit, the Bank of England's policy is behind the curve, and now these measures are coming, I think the UK will be remembered for a long time for poor macroeconomic policy.

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The Truss government has enacted the most aggressive package of tax cuts for Britain since 1972, reducing income and corporate taxes on workers to boost long-term economic potential, but economists fear it will push up government debt levels and trigger a currency crisis.

Sterling fell to its lowest level since 1985 on Friday (23rd) and was trading at $1.0908 as of 3:52pm London time.

Summers believes that if the current trend remains unchanged, he will not be surprised that the pound eventually falls below parity against the dollar, and he believes that the British government's tax cut policy is too naive and wishful thinking.

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