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The UK is gripped by an economic crisis of its own making

A week ago, the Bank of England took a stab in the dark. It raised interest rates by a relatively modest half a percentage point to tackle inflation. It couldn’t know the scale of the storm that was about to break.

Less than 24 hours later, the government of new UK Prime Minister Liz Truss unveiled its plan for the biggest tax cuts in 50 years, going all out for economic growth but blowing a huge hole in the nation’s finances and its credibility with investors.

The pound crashed to a record low against the US dollar on Monday after UK finance minister Kwasi Kwarteng doubled-down on his bet by hinting at more tax cuts to come without explaining how to pay for them. Bond prices collapsed, sending borrowing costs soaring, sparking mayhem in the mortgage market and pushing pension funds to the brink of insolvency.

Financial markets were already in a febrile state because of the rising risk of a global recession and the gyrations caused by three outsized rate increases from a US central bank on the warpath against inflation. Into that “pressure cooker” stumbled the new UK government.

“You need to have strong, credible policies, and any policy missteps are punished,” said Chris Turner, global head of markets at ING.

After verbal assurances by the UK Treasury and Bank of England failed to calm the panic — and the International Monetary Fund delivered a rare rebuke — the UK central bank pulled out its bazooka, saying Wednesday it would print £65 billion ($70 billion) to buy government bonds between now and October 14 — essentially protecting the economy from the fallout of the Truss’ growth plan.

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“While this is welcome, the fact that it needed to be done in the first place shows that the UK markets are in a perilous position,” said Paul Dales, chief UK economist at Capital Economics, commenting on the bank’s intervention.

The emergency first aid stopped the bleeding. Bond prices recovered sharply and the pound steadied Wednesday against the dollar. But the wound hasn’t healed.

The pound tumbled 1%, falling back below $1.08 early Thursday. UK government bonds were under pressure again, with the yield on 10-year debt climbing to 4.16%. UK stocks fell 2%.

“It wouldn’t be a huge surprise if another problem in the financial markets popped up before long,” Dales added.

The next few weeks will be critical. Mohamed El-Erian, who once helped run the world’s biggest bond fund and now advises Allianz (ALIZF), said that the central bank had bought some time but would need to act again quickly to restore stability.

“The Band-Aid may stop the bleeding, but the infection and the bleeding will get worse if they do not do more,” he told CNN’s Julia Chatterley.

The Bank of England should announce an emergency rate hike of a full percentage point before its next scheduled meeting on November 3. The UK government should also postpone its tax cuts, El-Erian said.

“It is doable, the window is there, but if they wait too long, that window is going to close,” he added.

The UK government has previewed rolling announcements in the coming weeks about how it plans to change immigration policy and make it easier to build big infrastructure and energy projects to boost growth, culminating in a budget on November 23 at which it has promised to publish a detailed plan for reducing debt over the medium term.

‘Right plan’ or ‘reckless gamble’
But it shows no sign of backing away from the fundamental policy choice of borrowing heavily to fund tax cuts that will mainly benefit the rich at a time of high inflation. And the UK Treasury says it won’t bring forward the November announcement.

Truss, speaking publicly for the first time since the crisis erupted, blamed global market turmoil and the energy price shock from Russia’s invasion of Ukraine for this week’s chaos.

“This is the right plan that we’ve set out,” she told local radio on Thursday.

One big problem identified by investors, former central bankers and many leading economists is that her government only set out half a plan at best. It went ahead without an independent assessment from the country’s budget watchdog of the assumptions underlying the £45 billion ($48 billion) annual tax cuts, and their longer term impact on the economy. It fired the top Treasury civil servant earlier this month.

Charlie Bean, former deputy governor at the Bank of England, told CNN Business that the government was guilty of “really stupid” decisions. His former boss at the bank, Mark Carney, accused the government of “undercutting” UK economic institutions, saying that had contributed to the “big knock” suffered by the country’s financial system this week.

“This is an economic crisis. It is a crisis… that can be addressed by policymakers if they choose to address it,” he told the BBC.

British newspapers have started to speculate that Truss will have to fire Kwarteng, her close friend and political soulmate, if she wants to regain the political initiative and prevent her government’s dire poll ratings from plunging even further.

“Every single problem we have now is self-inflicted. We look like reckless gamblers who only care about the people who can afford to lose the gamble,” one former Conservative minister told CNN.

But for now she’s trying to tough it out, and cling onto the Reaganite experiment.

“Raising, postponing, or abandoning tax cuts will be avoided by Truss at all costs as such a reversal would be humiliating and could leave her looking like a lame duck prime minister,” wrote Mujtaba Rahman and Jens Larson at political risk consultancy Eurasia Group.

Emergency rate hike?
The only alternative left to balance the books would be to slash government spending, and that would prove equally politically difficult as the country enters a recession with its public services under enormous strain and a restive workforce that has shown it’s ready to strike in large numbers over pay.

“Truss and Kwarteng are now facing a severe economic crisis as the world’s financial markets wait for them to make policy changes that they and the Conservative party will find unpalatable,” the Eurasia analysts wrote.

The foreign investors who keep the British economy solvent are left scratching their heads for another eight weeks, leaving plenty of time for doubts to surface again about the UK government’s commitment to responsible fiscal policymaking.

“The message of financial markets is that there is a limit to unfunded spending and unfunded tax cuts in this environment and the price of those is much higher borrowing costs,” Carney said.

That leaves the Bank of England in a tight spot. A week ago it was pressing the brakes on the economy to take the heat out of price increases, even as the government tried to juice growth. The task got even harder this week when it was forced to dust off its crisis playbook and bail out the government.

It may not be long before it has to intervene again, this time with an emergency rate hike.

“[Wednesday’s] intervention is designed to stabilize UK government bond prices, keep the bond market liquid and prevent financial instability but that won’t necessarily stop sterling falling further, with its attendant inflationary consequences,” Bean, the former central banker, told CNN Business.

“I think there is still a good chance they will need to act ahead of the November meeting,” he added.

— Julia Horowitz, Luke McGee, Anna Cooban, Rob North, Livvy Doherty and Morgan Povey contributed to this article.

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Tattoo Artist, Entrepreneur, and Oil Painter Kirby van Beek Makes a Mark in the Industry

Kirby van Beek, a talented tattoo artist, entrepreneur, and oil painter, has emerged as a prominent figure in the world of tattooing, showcasing his expertise in black and grey realism. Known for his distinctive designs and captivating portraits with a dark twist, Kirby has established himself as a highly regarded artist, earning recognition both locally and internationally.

Kirby’s journey as a tattoo artist began at the age of 18 when he taught himself the art form while simultaneously pursuing his education in forensic science. During this time, he displayed unparalleled dedication, working at a morgue during the week and honing his tattooing skills during weekends and spare hours. Kirby’s passion for tattooing led him to work at various tattoo studios in the Netherlands, solidifying his experience and expertise in the field.

About Kirby van Beek:

Kirby van Beek is a talented tattoo artist, entrepreneur, and oil painter based in [City]. Renowned for his expertise in black and grey realism, Kirby’s distinctive designs and captivating portraits with a dark twist have earned him a prominent position in the industry. With a passion for tattooing and oil painting, Kirby aspires to become a globally recognized artist, leaving a lasting impact on the world of art.

«The things I love most about tattooing is meeting different clients and getting to know them on a personal level during a long tattoo session,» says Kirby. «There is nothing more rewarding than tattooing individuals who appreciate my art so much that they choose to wear it on their skin for life.»

Specializing in realistic black and grey tattoos, portrait tattoos, and horror tattoos, Kirby’s work has garnered attention both nationally and internationally. His talents have been showcased at several tattoo conventions abroad, and his captivating designs have been featured in prominent tattoo magazines. Additionally, he has been recognized by esteemed publications such as LINDA magazine in the Netherlands and the local newspaper BN de Stem. Furthermore, Kirby’s exceptional skills led him to participate as a tattoo artist in the Dutch version of MTV’s Just Tattoo of Us.

Looking ahead, Kirby aspires to become a world-renowned tattoo artist and oil painter, with a particular focus on portrait tattoos and dark horror tattoos.

His ultimate goal is to reach clients and famous individuals around the globe, sharing his unique artistry and leaving an indelible mark on the industry. In the future, Kirby envisions opening an art show to showcase his diverse body of work.

To learn more about Kirby van Beek and explore his captivating portfolio, visit his official Instagram page (@kirbyvanbeek) or his website www.the-continental.nl.

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DJ Khenya Takes Center Stage at Blue Marlin Ibiza, Spreading Joy and Connection

The music of DJ Khenya pulsates with rhythm and emotion. A rich mélange of sun-kissed sounds that blend percussive beats with indie and deep house. The artist’s journey to Ibiza has laid the foundation for a musical expression that communicates joy and connectivity. Taking the reins at Blue Marlin Ibiza, Khenya’s vibrations will inspire dance floor dreamers to move and let go.

From the stage at Blue Marlin Ibiza, DJ Khenya has shared experiences alongside some of the most influential names in the music industry. When asked about the impact of these experiences, the artist responded humbly: «The truth is I feel lucky. I have total admiration for them as they are a source of inspiration for me.»

The energy at Blue Marlin Ibiza is unlike any other, according to DJ Khenya. He describes the place as «a life experience,» synonymous with summer and with all the ingredients to feel in a state of bliss when you’re there. He thanks the team for being like a family to him and for everything they’ve done.

This summer, DJ Khenya will take his audience on a journey filled with unforgettable emotions. He comments, «My goal is to transmit uplifting and unforgettable sensations. My audience is what sets my heart on fire, and I want them to feel my desire to make them dance.»

The path that led DJ Khenya to become a DJ began in Havacia, Cuba, where he grew up in an environment where rhythm, dance, and poetry are like the air we breathe. With son and salsa running through his veins, his first experience at an electronic music party in the early 2000s marked a shift in his life. Khenya recalls hearing ‘The Underground’ by Celeda and says, «It was a different Cuba, and I loved it. I think from that moment, something changed inside me. A seed had been planted, and life would take me in that direction.»

Having traveled the world and now based in Ibiza, DJ Khenya reflects on how these experiences have shaped his identity as an artist. He comments, «Traveling the world is a privilege that every human being should have, especially an artist because when you have these experiences, you can understand different ways of life and the musicality of each place. Creativity is born from that knowledge, and I still have a lot to learn in that sense.»

This summer, DJ Khenya promises to take Blue Marlin Ibiza to new heights with his unique music and his desire to make everyone dance. The experience is guaranteed to be a celebration of life, joy, and connection through music.

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Oliver Rouz: Weaving Ink and Inspiration into a Legacy

Born on February 13th, 1988, Oliver Rouz’s path to success is one marked by determination, passion, and the pursuit of creative endeavors. From a young age, Oliver exhibited a profound love for various forms of creativity, which ultimately led him to become one of the country’s most celebrated tattoo artists.

During his school years, Oliver’s artistic talent set him apart. His favorite cartoon characters became his canvas as he tirelessly recreated them in his own style. However, drawing was merely a pastime during his teenage years, a source of pleasure until music took center stage in his life.

In 2005, Oliver formed the «Fairy Tale Jelissa Rose» band, a pivotal moment that expanded his horizons. Immersed in the music community, he developed a newfound fascination with tattoos and ink artistry, spurred by the band’s association with the tattoo culture.

A serendipitous encounter with Artem at the «Quick Silver» shop in Moscow in 2010 marked a turning point. Artem’s influence led Oliver to consider a life-altering decision. By 2012, Oliver, now ignited by a passion for tattoos, made a bold move to another city, all while nurturing his tattoo aspirations.

Artem’s transformation into a tattoo artist himself inspired Oliver further. As fate would have it, an opportunity arose in 2012 for them to collaborate and open their tattoo studio in Moscow. This venture required Oliver’s dedicated efforts, alongside his commitment to saving funds to fuel their creative endeavor.

Oliver’s tattooing prowess flourished within a year, prompting a return to his hometown to establish several home-like studios. Yet, he recognized that true growth beckoned him back to Moscow. Thus, in 2017, he joined Good Hands Tattoo, laying the foundation for his continued ascent.

Oliver’s indomitable spirit and devotion to his craft bore fruit, as evidenced by his stint at Black Point studio, born out of a collective dream. His trajectory exemplifies the power of dedication, leading him to become a recognized tattoo luminary within the nation.

Oliver’s journey, however, extends beyond tattooing. From his early affinity for music, highlighted by the formation of his punk rock band at 14, to his involvement in the music industry and flirtation with global recognition, his story embodies the resilience required to navigate creative industries.

A pivotal moment arrived in 2021 when Oliver, undeterred by previous setbacks, chose to channel his creative energy into designing game art. Leaving behind a stable job, he invested his savings of around $5,000 to embark on a transformative journey. Guided by Hexeth’s interview and tutorials, Oliver delved into the realm of game design.

Fueled by dedication and a newfound purpose, Oliver’s creative expression culminated in designing elements for popular games like CS:GO and RUST. Through unwavering commitment and rigorous self-education, he harnessed the potential of his artistic flair.

Today, Oliver Rouz’s name resonates as a testament to the potential of human determination. His path from a young artist with a penchant for creation to a revered tattoo and game artist serves as an inspiration to countless dreamers. Oliver’s legacy continues to evolve, as he pushes the boundaries of his craft and inspires others to chase their passions unrelentingly.

For more information and to view Oliver’s work, visit his Instagram profile: @oliverrouz.