Theyre watching al jazeera, the headlines this our referendums in occupied areas of ukraine have ended with moscow and pro russian separatists declaring victory. They claim most people voted to join russia, reaching upwards of 95 percent in some territories. Keven its western allies say the vote is a sham. The Un Security Council has discussed these referendums in ukraine. The u. N. Political affairs chief says the votes have no legitimacy and International Law ukraines president told the council, the world must take action against moscow. And a senior russian official has issued the Biggest Nuclear threat so far in the war. Former president dmitri med beta have says he believes nato will not intervene if russia decides to attack ukraine with nuclear weapons. The Danish Energy minister suspects that blasts were the cause of gas leaks at 2 major pipelines between russia and europe. Denmark and sweden 1st reported to leaks in the north stream, one end nord stream, to pipelines near the island of bourne home. Earlier on wednesday, the hurricane in is intensifying as it moves towards the us 2 and a half 1000000 people who are under evacuation orders in the state of florida. The category for storm is expected to make landfall later on wednesday. Its already battered parts of the caribbean, including cuba. When you look at storm surge of this nature, that is a very life threatening hazard. When youre talking about 10 feet, 12 feet of storm surge, which you could see in certain parts of this when it makes landfall, its also going to produce a massive amount of rain. It is going to produce major, major flooding. And there has been violence between Security Forces and demonstrators, and dozens of iranian cities as protests continue over the death of a 22 year old women in Police Custody rights groups, as at least 75 people have been killed in the unrest matter. Many died after being detained by iran, so called morality police, the not properly wearing her job. Saudi arabias crown prince mom had been so much, has been named as the kingdoms Prime Minister. The saudi king ordered the cabinet reshuffle. King solomons other son holly been someone, is the new defense minister. All right, that does it for your headlines and l 0. Stay with us. Up next. Inside story on al jazeera statement. Ah, the british pound crash is to an all time low against the us dollar. It follows the u. K. Governments drastic tax cutting move to fight inflation. What a fool out on and already struggling economy both in the u. K and outside. This is inside stored. Ah hello and welcome to the program. Im has them seek out. The british pound is struggling to hold value against the u. S. Doll off the heading an all time low. It recovered slightly on monday, after plunging nearly 5 percent. The fall is raising concerns about the world 6 biggest economy and its appeal to international investors. On friday, the new British Government unveiled major tax cuts based on borrowed money, and many are concerned about the amount thats needed. Thats led to days of volatility in the value of sterling and undermine its status as a reserve currency. Our correspondent Charlie Angela has more for us from london, utter an anxious thought the pounds used to be clawing back some of its losses and steadied somewhat. But the public investors and banks understand to be so very nervous and that placing much of the blame on south flood quasi plaza, i think what it is planned for balance. The both of the largest tax got in 50 years. At the time, well be meeting with some top bankers in senior city figures later on tuesday and plan talk that will probably evolve into form a crisis meeting. And thats the Interest Rate predictions. Oh, ready . Rising britains now looking at a Interest Rate of 5. 8 percent this time next year. Huge height of lawsuits predicted of just 4. 5 percent. As a result were thing, some mortgage lenders, poor the poor product from the market, worried that they would be able to meet their margin so that people will be able to make their repayments and that is going to be a huge blow. The people who are trying to get on the Property Market or needed to re mortgage their properties all at a time or the cost of living in this country is increasing office rate. In 40 years, their businesses and markets are they were looking to the bank of england for some decisive action, but well have to wait until the next meeting on november 3rd. The government however says it will bring for the day a plan to publish it, media and fiscal policy from next year to november, 23rd, but thats still 9 trading weeks away. Whats needed right now is confidence. Instability said that the markets need to see a Macro Economic plan that they believe it or the Opposition Party wasted no time. Giving its burdick labors shadow chancellor. Rachel reeves accused the government of gambling and said the british taxpayer will pay the price. Sterling is down. That means higher prices at the cost of imports rise. The cost of government borrowing is up. That means more taxpayers, money will go into paying the interest on our government debt. And in turn, that means the cost of boring working people will now go up to. So how will a falling pound affect people . Well, the u. K. Imports more than half of its food, so the cost of everything from apples to coffee will go up. The rise will be especially notable in goods traded in u. S. Dollars like orland gas, lower income found families will be the hardest hit with their earnings having to stretch even further with winter approaching. Heating costs are another concern. Brings money also wont go as far as if they travel to the u. S. Or 2 countries using the dollar for, for taurus the drop in the pound means it will be cheaper to visit the u. K. Ah, the july jesus is getting worse and worse and worse, a poor right now theyre on lower incomes. Theyre struggling, national, given the heating and their bills. Everything is going up. Why would they be cutting it for the people in the higher income records ridiculous . London is getting worse. Thing thats getting worse, to be honest, you could argue that its a good strategy because a attract sort of business is to come into set up to establish reason in london. So to that extent brought up, perhaps it is a good decision. But on the other hand, again, its going to reduce the overall say for instance, the money that can be a lot easier allocated to welfare benefits. St. Housing is going to be a challenge. But yeah, i yeah, its good to have a mini boucher, i just wish that during this time with National Crisis that we were spending a bit we were a nuisance to meet. You know, what does that mean for me now . And some of the fun things i was just at Covent Garden and walking along the shops there and deliberately not going in from places. Maybe ill go back that to big plus. Thats a big difference when you get more bang for your back. Might want to problem. Of course, by doing this i, you can spend money on purchasing bank is a good time to do it because were not earning house. Ah, well, lets bring in our guess. Now in london, we have vicky price chief economic adviser at the center for economics and Business Research in dublin, bryan, lucy, professor of International Finance and commodities, a trinity business school. And also in london, jonathan lays, journalist and political commentator. Good to have you with us. So vicky price, let me start with you. Its being called trust nomics this, these tax cuts named after the, the new british Prime Minister. Clearly they havent gone down well with the Financial Markets. Why is that . The real problem has been the the chancellor who is newly appointed of course by this trust, the new Prime Minister announced a mini budget. We will call it that, which wasnt very many a tool, but actually introduce a tax cuts to the tune of 45000000000. 00 pounds, which is the biggest size of trucks because weve seen since 1972 and it made people worry about the inflationary impact of this but also how that injection into the economy if you like, would be funded. So what happened, of course as a result, not only did sterling suffer because there were concerns that the inflationary element would be quite significant of those new measures. But also of course, bond market reacted very negatively and weve seen yields rise very significantly. In other words, the Interest Rates that people want to have is that all prepared to lend to the u. K. Government, theyve risen to over 4 percent. And thats huge because if you remember just a year ago yield, dont any government bonds were below one percent. And now we are about 4 percent. Thats a very substantial increase in Interest Rates, which is going to be felt throughout the economy because loads and loads of long term rates are based on those yields. Why is this affecting the pound so much . Why . Why . Why is the pounds fallen so protect precipitously and in the last few days . But the one reason, of course, is that inflation now used to be a little bit higher. Now remember of course that we had a budget mini budget, which not only of course, injected this extra money into the economy, but also gave the amounts of money that would be needed for an electricity price freeze, which was introduced also by the new government. But of course, we hadnt heard some of the details now that the electricity price raised itself should be bringing inflation down quite significantly by possibly 4 percentage points. So the bank of england was quite right to raise Interest Rates by just 50 basis points the day before that was september 22nd. The market didnt like it very much because everyone else has been raising Interest Rates recently by point 75 percent. But nevertheless, i think it made sense because those where the inflationary projections are now being made, then you added, oh, the real worry of this and funded budget and all the money that would be coming to the economy, fueling inflation again. So other markers decided was that actually that Interest Rate increase wasnt sufficient because now you have, once again, an increase in inflationary expectations because of that. So the pound suffered because there wasnt an underpinning Interest Rate support if you like to keep the, the currency up. And thats why the punch, the pumped brian loosely, what does this mean for the rest of the world as well for the, for the companies that do business or with the u. K and for others would want to invest there in the future. I think if you were a company that was selling into the u. K, so youve got a problem with depreciation in the sense that it makes stuff more expensive for people in the u. K. But the nature of the tax cuts is incredibly skewed. And it really is the case that this is wonderful if youre selling caviar, high quality Leather Goods or other forms of consumption for, for the very rich. The vast majority, people in the u. K. Arent going to see any benefit from these tax cuts except as wiki has said in terms of inflation. Busy so overall i would say this makes for number e d, u k, a less attractive place to do business. The big problem is not the particular issues in governments. Fit around with tax cuts on Interest Rate changes happen all the time. The difficulty is that there seems to be a degree, lien, coherence, and even bordering on incompetence around whats going on. And that doesnt foster that doesnt foster any degree of credibility for the last 67 years. You k has been looking like an increasingly economically incoherent office. Starting from breakfast, then through the negotiations, which resulted in about the hardest friends, a chart of the board of trade organization, which is still something desired by the intellectuals, as it were behind the tory party through now a series of, of, of events which have, you know, under course, the event coming in inflation fighting efforts. And we know from bitter experience in the 19 seventys and early eighties that in the long term inflation is, you know, very destructive all the countries well being. So its kind of strange that you got a chancellor who has a ph. D, which was the on the a u. K. Starting crisis in the 17th century, who has holds himself. And as for the factions, out of the precipitating, started cross, it has to be remembered that much. So the u. K. Government might think starting is not really the worlds reserve currency, just a dollar. And while it is highly desired and highly demanded and held as a reserve office, liquid reserves by the bank of england should they be so desirous of intervening directly in the foreign exchange. Markets are very, very limited. Financial times they estimates that they are approximately a 100000000000. 00, which is really a drop in the ocean when you consider how much starting the straightest. So its not the individual and just the death by 1000 cuts of the midst of the tories, big party of good economic competence that i think will be the long run problem here. Jonathan lays, this is being seen as a huge political gamble for the new which is Prime Minister. And whenever a new lead comes into the job, their Political Capital is normally at its highest. So has least trust, essentially put down all her chips on this list. Trust the state, the entire house on this political gamble, and by any measure she has lost as you not, i did not too early to say that well, a was in a lease trust his plan to crush the pound. I presume a wasnt in this trust. His plan to have an emergency statement by the bank of england suggesting that they might have to raise Interest Rates before the next scheduled meeting of the Monetary Policy committee. I do think it could have been in this trust is plans to see storing Interest Rates, which again to see Mortgage Rate increased by several 100 pounds for and homeowners with mortgages. He les, not forget one of the bases of the tory party that voted based that actually the demographic which turned much of the north and mittens for the conservative party in 2019. And so this is a political, as well as an economic disaster. And i suppose the investors are a bit like predators in horror films. They kind of, they can sense panic. They can, they can see when people dont exactly know what theyre doing. At the moment, both the government, the bank of england, are in a position of extreme weakness, not least because they are pulling the leaders in different directions. The government is trying to accelerate the economy, was the bank of england is putting a brake on it by raising Interest Rates. And investors can see there is no hearing in that plan. And as a result, they are taking fright and taking sterling out with them. Yeah, lets talk a little bit more about that clash between the government and the bank of england and their priorities because the bank of england, like many countries in the world doesnt enjoy a certain level of independence. They can set the Interest Rates with this sort of growth focused goal of, of least trust. Is it funded mentally at odds with, with the inflation fighting mission of, of the bank of england. But i would agree that there is a bit of as get the funding existence right now between the government and the bank of england. The bank of england isnt data you rightly say independent, although there had been some hence during the campaigns for deciding the new tory leader, the less trust was questioning the independence of the central bank. Are some aspects of it. Now that independence is very important, but of course the limits of the have which is given to them by the government, by the chancellor is to keep inflation at 2 percent target if they can, of course talk. It has been hugely exceeded in reality, in the sense that we now have 10 Percent Inflation of thereabouts, but its no dissimilar to whats happening in the us, whats happening and inquire about the countries, of course, in Continental Europe or also the c b. Hes also having this particular problem. In fact, if you look at some of the countries in europe, particularly those that are bordering russia. Weve had inflation of over 20 percent for a quite a few months now. So the reason to doubt that weve got a problem if whatever youre trying to do on the fiscal front is negated by what happens on the financial front. And the way in which the government is going about trying to get more growth inevitably led to this reaction in terms of Interest Rates, not just where the bank of england does, but also more importantly, i think whats happening in the bond market. So Interest Rate is going up is as jonathan was just saying, youre pretty, pretty dreadful for a. Busy number of individuals, of course, for a very large number of households, but also will be picked about for business, which have just been quite happy to see a bit of relief from the energy from even though its short term. And well see what happens next. And now being hit by this, and its not surprising that all the data we already have in terms of Consumer Confidence and Business Confidence has tend to move downwards. And i think whats been happening last few days, it will move it down was even further. So i how the whole thing would be resolved, of course, is a question mark, but i have to say, this is not the only country where this is happening, but it is been shown in a more vivid form because of this many budget which was unexpected in its in its size and which the markets in b believe is unfunded. And therefore posing loads of problems of economy. Brian, lucy was you will take on, they said this sort of, this is conflict between the government and the bank of england, and that theyre mixed priorities. Its not mix priorities. These are literally orthogonal priorities. The only way in which this can mark is if the economy grows through these massive tax cuts and this is reaganomics and 92. 00 with the cost of the laffer curve trickle down economics, which is just buncombe. I mean this is voodoo economics. As george bush famously was called us before proceeding to teach implementing us. One thing that Reagan Reagan amik, stayed, was to absolutely balloon out the u. K. Now the us National Desk and doing, doing the same no 4 medium sized economy facing significance problems already is as was said, not just betting the house, but getting the childrens houses. The logical end game here for you government is to reduce the independence of the bank of england. Now dont think that they cannot make sensible at all, but that is the logical end game. You could, you can see story where they say, look, the bank of england are shuffling our ability to grow the economy to attract customer restructuring. Therefore, we must reduce independence because Interest Rate rises are a bad thing in this context. Thats politically sensible. Political hurts but ends up economically in an incredibly bad place. And i think the u. K is in danger of us because we are not seeing we have not seen for the last 7 years. Is economic technocratic, sensible decisions. Weve seen increasingly friendly logic of decisions driving, driving, economic outcomes, and theres no evidence about or if your logical based economics is being reduced in any way. In fact, if anything it has become sharper, focus with the election by 83000 people very are. Ready representative of the u. K. Population of extreme, the right wing economically right wing governments johnson laser. How did the conservative does the conservative government to recover from this politically and the political fall out over this . Because the optics of this on the surface certainly dont appear to be good. You know, this tax cuts at the mostly the riches people will benefit from in the middle of a cost of Living Crisis Energy crisis and so on. I think youve hit the nail on the head thats they have sabotaged themselves politically. I suppose the big point days that this actually wasnt an economic measure on 5. This wasnt an economic and he bought it. This was a political act. This is most faced by politics more than economics, which is why a economy condemning it. Markets were voting with their feet because it made no sense economically. At least trust her. An overriding mission is to promote grace, but it means that she made all the music. She had chancellor made a not going to promote grace on some of the from the headline, the headline, the bills such as to to remove the 45. 00 p additional rates of tox, on the nice wealthy people in society. And to left the e cap on bankers business days, which is entities off the financial crush and not going to promote growth. Really, a tool evidence suggests that those measures might really effect great either way. But they are political measures to chime with a hard, right . Conservative ideology which favors the ridge, particularly in the eyes of labour cliches of concern to thinking the conservative or walk in stock cliche, favors the rich of the rich and allows the super rich to benefit nice from tucked us, leaving the poorest with almost no benefits whatsoever so that is the kind of the, the policy platform which trusts has not firmly planted on the British Electoral terrain. And i dont see why shes done something so deliberately how she can reverse it because known, forced her into that position. She has chosen not as high relation, entirely, and so i dont see how she suddenly decides to reverse that and move the point. I think she wants to reverse that. And not really is the case to the labor party because they can show that a concert saves really our thoughts right party and times where saturate them is not the cure for any condition. And so if the Labor Party Just talks about bancwest bonus days on top of the richest, they really can walk through the next election without too many problems. I dont see how trust recall is a tool. A policy may just like get rid of had before the election. Vicky price is there, is there any way to for, to recover from this . I mean, if, if the, the Financial Markets stabilize over the next few days and the, the, the pound, lease stops falling the way it has. What do you think could happen further down the road . Well, its interesting, you know, what room for maneuver is. I mean, the interesting thing is that quite a lot of the route in the markets that we have seen. So the, the rise in yields the, the concerns of the markets about the debt and the expectations. Maybe that the bank of england would do an emergency Interest Rate hike, which they didnt do in the end. So then wait until november has also been caused by the fact that the chancellor announced a couple of days after them in your budget that there would be more tax cuts to come. And i think thats what if you like and the pound falling even faster. But of course your quarter i did sort of recovered and i think theyre hoping that maybe the market and forget about this for a while. But we cant get away from the fact that the pound has already fallen very significantly. This year has gone down by between 20 and 30 percent just from the beginning of january on revised expectations. And were hearing earlier about the Growth Prospects for the economy. We are the bottom, if you like, of the g 7 league in terms of growth. It seems. And the focus was just appeared from the o. C. D, the organization for economic operation development. Look at various countries in europe, which may be in recession next year. And those are germany, italy and the u. K. A bit earlier it was almost only the u. K. But now of course because of gas concerns and rationing ok, see the other countries added as well . All right, were going to have to leave it there. Thanks very much to all 3 of you, vicky price, brian lucy and jonathan. Liz, thanks so much for being on. And so i story and thank you as well for watching. Remember, you can see the final again, any time. Just go to our website edges here dot com. And for further discussion, go to our facebook page. Thats facebook dot com, forward slash ha inside stored. You can also join the conversation on twitter handle. There is at a j inside story for me has im secret and the whole team here, bye for now. Ah bosnia and herzegovina is going to the polls amid the disputes over election reforms that would enable people to vote along ethnic lines at all levels of government. Right up to the presidency as opposed me and serves challenge state institutions in their escalating bid for succession. 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