The UK's abrupt tax cuts are sowing market chaos — and putting policymakers in a no-win situation that threatens economic crisis

The UK Prime Minister has only been in office for 22 days, but her plans to cut taxes on the wealthy have already sent markets plunging, solicited ire from an international banking group, and sown outrage among the country's taxpayers.

The effort to boost the UK's economic growth was a flop. The blowback could range from a weaker British pound to a government default.

The mini-budget proposed sweeping tax cuts for the rich and abolition of a tax on property purchases less than $250,000. The Chancellor said the aim was to lift the UK economy and cut the risk of a downturn.

The British pound fell to a record low against the US dollar on Monday as investors bet the tax cuts would weaken the currency.

The International Monetary Fund said the plan would likely increase economic inequality and undermine the Bank of England's efforts to cool inflation.

The International Monetary Fund doesn't recommend large and untargeted fiscal packages at the moment because of elevated inflation pressures.

For most Britons, the plan's passage could lead to a widening wealth gap and rapid inflation. Massive interest rate hikes and soaring energy prices have caused the economy to slow. The tax cuts could lift growth for a short time, but they could leave many Britons out of work and unable to pay their bills.

The Bank of England has stepped in with emergency bond purchases to ease market functioning, but the move undermines its own plans to start selling bonds. The intervention could keep price growth at a historically fast pace.

Economic chaos is set to weigh on Britons one way or another

The economic pain is likely to be significant if tax cuts are enacted.

The Bank of England will have to speed up its efforts to bring inflation down.

The labor market would be adversely affected by a more aggressive hiking cycle. Firms look to cut costs and preserve margins as a result of higher rates. The Bank of England's actions could cause the UK to go into a recession as jobs are lost, spending slows and the economy weakens.

British people are likely to oppose the reforms. According to a survey conducted by the National Centre for Social Research, most Britons support hiking taxes and spending on health, education, and social programs. More than two-thirds of respondents said working Britons don't get a fair cut of the country's wealth, and almost half said they back redistributing income to those in need.

According to the Office for National Statistics, the richest 10% of households owned more than half of the country's wealth. The bottom half of earners had less wealth than the top half.

Truss' shift toward Reaganomics puts the UK economy in a bind

Americans with knowledge of US fiscal policy in the 1980s will be familiar with the proposal. Ronald Reagan argued that tax cuts for corporations and wealthier Americans would pay for themselves by stimulating economic growth and that the benefits would trickle down to all Americans over time.

There was an economic sugar rush. It took some time for growth to return to historical trends. The tax reforms caused the deficit to grow dramatically in the 1980's, paving the way for dramatic cost-cutting in the following years.

There are concerns with the plan. The proposal is not fully paid for and would create a huge deficit. The government could be forced to default on its debt or print more money to pay for it if the market carnage continues.

When inflation is at a 9.9% year-over-year rate, it injects more money into the economy. The Bank of England will either have to raise interest rates more aggressively or it will be too hot to spend. It looks like a recession is more likely now.

It would take some time to get back to normal, even if the proposals are put on hold. Businesses that rely on imported goods are being put under more pressure by the pound's lower value against the dollar. Almost half of the UK's food and energy is imported. As the winter brings colder weather and energy demand increases, a weaker pound could cause prices for such goods to go up a lot.

If she still wants to pass her proposals, she's going to have a hard time. With markets still reeling from the Friday announcement, damage control is likely top of mind for many in Parliament.