Liz Truss' tax plan sends U.K. into chaos

LONDON — If anyone thought Britain was due for a period of calm after Boris Johnson stumultuous premiership, no one told his successor.

The country was facing an ugly menu of challenges. The proposed solution by the new prime minister Liz Truss has quickly sent the economy into chaos, threatening consequences both immediate and long-lasting for many Britons.

Her Conservative government's 45 billion pound $48 billion plan to slash taxes has caused shock waves through financial markets, which have caused the pound to plummet and leave Truss' political future in doubt just three weeks after taking office.

After days of turmoil, the U.K. drew a rare rebuke from the International Monetary Fund, which urged the government to reconsider a plan that may fuel inflation and increase economic inequality.

The Bank of England, the U.K. central bank, announced on Wednesday it would buy up as much government debt in an effort to restore stability.

Keir Starmer, the leader of the opposition Labour Party, joined others in urging the government to address the crisis by recalling Parliament, which is on recess.

Few Brits actually voted for Truss, who won the race to replace the scandal-hit Johnson by appealing to around 200,000 members of the ruling Conservative Party. She sold herself as a free-market heir to the divisive former leader Margaret Thatcher, but polls show that the public at large has not taken to her policy proposals, further weakening her position.

It all stems from her gamble to spur economic growth and combat what many experts say could be a long recession, spearheaded by a grim winter in which some families could struggle to pay for energy and food.

The last week has left many Brits feeling a deeper sense of despair about the country's future, beyond the halls of Westminster and the frenzied trading floors of the City of London.

Rebecca McDonald, chief economist at the Joseph Rowntree Foundation, said there are millions of people in the U.K. who will find this winter incredibly difficult for them. These people had to watch the chancellor cut taxes for those who are better off — it was incredibly hard to hear. The market reaction to Truss' plan sent government borrowing costs going up, likely to be met with higher inflation and interest rates, which could in turn lead to more expensive credit cards and mortgages, even threatening a subprime housing crisis if people can't make repayments. The nose-diving pound will make everyday products more expensive in Britain as importers face spiralling costs.

The mini budget wasn't accompanied by spending cuts, or a traditional independent cost estimate that might have helped ease market fears, if not public criticism of its leader's priorities.

The argument of the government is simple in theory. It wants to supercharge Britain's sluggish economy by any means necessary, even if that means short-term shocks.

It was left up to Treasury chief Kwasi Kwarteng to drop the biggest bombshell in Parliament on Friday: a tax cut for people who earn more than 150,000 pounds $160,000 a year. He told lawmakers that this would make Britain more competitive, reward enterprise and work, and incentivize growth. It will benefit the whole economy and the whole country. In its defense, the government points out measures at the other end of the scale, such as cutting the lowest tax bracket and a pledge to freeze household energy bills until 2024, are part of a 150 billion pound $162 billion public support package that ranks among the biggest in history, something McDonald called very important and very significant, according to the Joseph Rowntree Foundation. NBC News reached out to the British Treasury for comment.