UK prime minister says pound's slump is due to fallout from Russia-Ukraine war as she defends tax cuts in aftermath of market turmoil

The pound fell last week because of the Russia-Ukraine war, but the prime minister defended the tax cuts.

The pound fell to a 37 year low on Friday after the UK's new mini-budget included plans to cut taxes for the highest earner. Turmoil stemming from a loss of confidence in the ability of the UK economy to endure further inflation and concern over government debt led to a sell-off in UK government bonds.

The new tax plan is not to blame for the slump in the UK currency, according to the Wall Street Journal. The impact of the Russia-Ukraine war on the global economy was pointed out by her.

There is a global financial situation The currencies are under pressure.

She said that she would not back down on her plans to cut taxes. The UK's inflation rate is 9.9%, down from 10.1% in July.

The new mini-budget has been ripped into by experts, with Noble economist Paul Krugman calling it "moronic" and top economist Mohamed El-Erian urging the Bank of England to issue a super-sized emergency rate hike.

When prices are already sky high, unfunded tax cuts and increased debt can exert more inflationary pressure on the economy. It could cause the Bank of England to raise rates more aggressively than planned.