Inflation (Economics)

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      Lessons From Liz Truss’s Handling of U.K. Inflation

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      The sharp policy U-turn by Liz Truss, Britain’s prime minister, reveals the perils of taking the wrong path in the fight against scalding inflation.Government leaders in the West are struggling with rising inflation, slowing growth, and anxious electorates worried about winter and high energy bills. But Liz Truss, Britain’s prime minister, is the only one who devised an economic plan that unnerved financial markets, drew the ire of global leaders and the public and undermined her political standing.On Friday, battered by savage criticism, she retreated. Ms. Truss fired her top finance official, Kwasi Kwarteng, for creating precisely the package of unfunded tax cuts, billion-dollar spending programs and deregulation that she had asked for.She reinstated a scheduled increase in corporate taxes to 25 percent from 19 percent, a rise she had previously opposed. That announcement came on top of backtracking last week on her proposal to eliminate the top 45 percent income tax on the highest earners. The prime minister, in office a little over five weeks, also promised that spending would grow less rapidly than proposed, although no specifics were offered.The drama is still playing out, and it’s unclear if the Truss government will survive.In the United States, President Biden, while waging his own political battles over gas prices and inflation, has not proposed anything like the kind of policies that Ms. Truss’s government attempted, nor have any other leaders in Europe.Still, for European governments whose economies are suffering greatly from shocks and energy price surges caused by Russia’s war in Ukraine, there are timely lessons from the debacle playing out in London.One of the strongest was delivered early on by the International Monetary Fund: Don’t undermine your own central bankers. The I.M.F., which usually reserves such scoldings for developing nations, on Thursday doubled down on its message. “Don’t prolong the pain,” Kristalina Georgieva, the managing director, admonished.How to blunt the impact of inflation on the most vulnerable without further stoking inflation is the dilemma that every government is confronting.The Bank of England in London has aggressively tried to slow the sharp rise in prices by slowing the British economy.Alberto Pezzali/Associated Press“That is the question of the hour,” said Eswar Prasad, an economist at Cornell University who was attending the annual meetings of the World Bank and I.M.F. in Washington this week.Tension between the fiscal spending policies proposed by a government and the monetary policies controlled by central banks is not unusual. At the moment, though, central bankers are engaged in delicate policy maneuvers in the fight against a level of inflation not seen in decades. With the rate in Britain nearing 10 percent, the Bank of England has moved aggressively to slow down climbing prices through a series of interest rate increases aimed at crimping consumer and business spending.Any expansion of government spending is going to interfere with that aim to some degree, but Ms. Truss’s plan was far too big and too ill defined, Mr. Prasad said.“Measures to help households hit hard by energy increases, by themselves, would not have created that much of a stir,” he said. Many other countries have proposed exactly that. And the European Union has proposed a windfall tax on energy profits to help finance those subsidies.Ms. Truss, instead of coming up with a way to pay for energy assistance, pushed to eliminate a corporate tax increase and cut income taxes for the wealthiest segment of the population. The result was a reduction in government revenue and a ballooning of Britain’s debt.“Overall, the package did not have much clarity in terms of how it would support the economy in the short run without raising inflation,” Mr. Prasad said.By contrast, Claus Vistesen, chief eurozone economist at Pantheon Macroeconomics, cited the way governments and central banks worked in tandem when the pandemic struck in 2020 to keep economies from collapsing, issuing vast amounts of public debt.“Central banks printed every single dollar, euro and pound that governments spent” to support households and businesses because of the Covid crisis, Mr. Vistesen said. But now the circumstances have changed, and inflation is setting economies aflame.The actions of the Federal Reserve in the United States illustrate the switch central banks have made: In the harrowing early weeks of the global outbreak of the coronavirus, the Fed embarked on an extraordinary program to stimulate the economy and stabilize markets. This year, the Fed has been swiftly raising interest rates in a bid to slow growth.Both the United States and eurozone countries have somewhat more wiggle room than Britain, because the dollar and the euro are much more widely used around the world as currencies held in reserve than the British pound.Kwasi Kwarteng, Britain’s former chancellor of the Exchequer, left 11 Downing Street after Ms. Truss fired him on Friday.Kirsty Wigglesworth/Associated PressEven so, European governments can help households and businesses get through an energy crisis, Mr. Vistesen said, but they can’t embark on an open-ended spending spree.They also need to take account of what is happening in other economies. The richest countries that make up the Group of 7 are essentially part of the same “monetary and fiscal convoy,” said Will Hutton, president of the Academy of Social Sciences. By championing a Thatcher-era blend of steep tax cuts and deregulation, he said, the Truss government strayed too far from the rest of the flotilla and the economic mainstream.The adherence to 1980s-era trickle-down verities also revealed the risks of sticking with outdated policies in the face of changing circumstances, said Diane Coyle, a ​​public policy professor at the University of Cambridge.“The situation in 1979 was very different,” Ms. Coyle said. “There were sclerotic high taxes and an overregulated economy, but not anymore.” Today, taxes in Britain are lower, and the economy is less regulated than the average member of the Organization for Economic Cooperation and Development, a club of 38 major economies.“The character of the economy has changed,” she said. “Public investment in research and skills are more important.”In that sense, what was missing from Ms. Truss’s economic plan was as important as what was included. And what Britain is lacking, said Mariana Mazzucato, an economist at University College London, is a visionary public investment program like the trillion-dollar climate and digitalization plans adopted by the European Union or the climate and infrastructure program in the United States.A rate of Inflation nearing 10 percent in Britain has affected the price of groceries and how people spend their money.Alex Ingram for The New York Times“If you don’t have a growth plan, an industrial strategy innovation policy,” Ms. Mazzucato said, “then your economy won’t expand.”Both Ms. Mazzucato and Ms. Coyle emphasized that Britain had some specific economic handicaps that predated the Truss administration, including the 2016 vote to exit the European Union, a stubborn lack of productivity, anemic business investment, and lagging research and development.Still, Ms. Coyle offered some advice that referred pointedly to Ms. Truss. “I think the main lesson is: Don’t shoot yourself in the foot.” More

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      French Refineries Strike May Presage a Winter of Discontent for Europe

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      Bitten by inflation, workers are demanding a greater share of the surging profits of energy giants. It’s the kind of unrest leaders fear as they struggle to keep a united front against Russia.LE HAVRE, France — The northern port city of Le Havre is less than 25 miles away from two major oil refineries. But on Friday, the pumps at many gas stations were wrapped in red and white tape, the electric price signs flashing all nines. Little gasoline was to be had.Across France, a third of stations are fully or partly dry, victims of a fast-widening strike that has spread to most of the country’s major refineries, as well as some nuclear plants and railways, offering a preview of a winter of discontent as inflation and energy shortages threaten to undercut Europe’s stability and its united front against Russia for its war in Ukraine.At the very least the strike — pitting refinery workers seeking a greater share of the surging profits against the oil giants TotalEnergies and Exxon Mobil — has already emerged as the first major social crisis of Emmanuel Macron’s second term as president, as calls grow for a general strike next Tuesday.“It’s going to become a general strike. You will see,” said Julien Lemmonier, 77, a retired factory worker stepping out of the supermarket in Le Havre on a gray and rainy morning. He warned that if the port workers followed suit, “It will be over.”Striking employees of the Total refinery on Thursday.Andrea Mantovani for The New York TimesThe widening social unrest is just what European leaders fear as inflation hits its highest level in decades, driven in part by snarls in post-pandemic global supply chains, but also by the mounting impact of the tit-for-tat economic battle between Europe and Russia over its invasion of Ukraine.Economic anxiety is palpable across Europe, driving large protests in Prague, Britain’s biggest railway strike in three decades, as well as walkouts by bus drivers, call center employees and criminal defense lawyers, and causing many governments to introduce relief measures to cushion the blow and ward off still more turbulence. Airline workers in Spain and Germany went on strike recently, demanding wage increases to reflect the rising cost of living.For France the strikes have touched a long-worn nerve of the growing disparity between the wealthy few and the growing struggling classes, as well as the gnawing worry about making ends meet in the cold winter ahead.Workers at half of the country’s eight refineries are continuing to picket for higher wages in line with inflation, as well as a cut of the sky-high profits their companies made over recent months, as the price of gasoline has surged.“The money exists, and it should be distributed,” said Pascal Morel, the regional head of Confédération Générale du Travail, or CGT, France’s second-largest union, which has been leading the strikes. “Rather than laying claim to the striking workers, we should lay claim to their profits.”Pascal Morel, the regional head of Confédération Générale du Travail, one of France’s largest unions, which has been leading the strikes. Andrea Mantovani for The New York TimesSlow to notice at first, the country was rudely awoken to the strike’s effect this week, when pumps across the country ran out of fuel, forcing frustrated motorists to hunt around and then line up — sometimes for hours — at stations that were still open. Nerves quickly frayed, and reports of fistfights between enraged drivers buzzed on the news.In Le Havre, as in the rest of the country, residents revealed mixed feelings about the strikes. Some expressed solidarity with the workers, while others complained about how a small group was holding the entire country hostage. On both sides of the divide, however, many feared the strike would spread.The State of the WarA Large-Scale Strike: President Vladimir V. Putin of Russia unleashed a series of missile strikes that hit at least 10 cities across Ukraine, including Kyiv, in a broad aerial assault against civilians and critical infrastructure that drew international condemnation and calls for de-escalation.Crimean Bridge Explosion: Mr. Putin said that the strikes were retaliation for a blast that hit a key Russian bridge over the weekend. The bridge, which links the Crimean Peninsula to Russia, is a primary supply route for Russian troops fighting in the south of Ukraine.Pressure on Putin: With his strikes on civilian targets in Ukraine, Mr. Putin appears to be responding to his critics at home, momentarily quieting the clamors of hard-liners furious with the Russian military’s humiliating setbacks on the battlefield.Arming Ukraine: The Russian strikes brought new pledges from the West to send in more arms to Ukraine, especially sophisticated air-defense systems. But Kyiv also needs the Russian-style weapons that its military is trained to use, and the global supply of them is running low.“It’s going to bring France to a standstill and I assure you it doesn’t need that,” said Fatma Zekri, 54, an out-of-work accountant.On Thursday, workers echoed the call for a general strike next Tuesday originally issued by the CGT and later supported by three other large unions. And a long-planned protest by left-wing parties over the rising cost of living scheduled for Sunday threatens to become even larger.For Mr. Macron, the strike holds obvious perils, with echoes of the social unrest of the Yellow Vest movement — a widespread series of protests that started as a revolt against higher taxes on fuel. The movement may have dissipated, but its anger has not.In Le Havre, residents revealed mixed feelings about the strikes. Some expressed solidarity with the workers, while others complained about how a small group was holding the entire country hostage.Andrea Mantovani for The New York TimesThe protests paralyzed France for months in 2018 and 2019, led by lower-middle class workers who took to the streets and roundabouts, raging against a climate change tax on gas that they felt was an insulting symbol of how little the government cared about them and their sliding quality of life.The current strikes illustrated a longstanding question that continues to torment many in the country, said Bruno Cautrès, a political analyst at the Center for Political Research at Sciences Po University — “Why do I live in a country that is rich and I am struggling?”Speaking of the president, Mr. Cautrès said, “He has not managed to answer this simple question.”After winning his re-election last April, Mr. Macron promised he would shed his reputation as a top-down ruler and govern the country in a more collaborative way.“The main risk is that he will not succeed in convincing people that the second term is dedicated to dialogue, to easing tensions,” Mr. Cautrès said.But even as he faced criticism that his government had allowed the crisis to get to this point, Mr. Macron sounded defiant on Wednesday night, saying in an interview with the French television channel France 2 that it was “not up to the president of the republic to negotiate with businesses.”The Total refinery, shuttered during a strike by workers.Andrea Mantovani for The New York TimesHis government has already forced some workers back to a refinery near Le Havre and a depot near Dunkirk.“I can’t believe that for one second, our ability to heat our homes, light our homes and go to the gas pump would be put at risk by French people who say, ‘No, to protect my interests, I will compromise those of the nation,’” he said.Still, Mr. Macron is treading a very fine line. The issue of “super profits” has become a charged one in Parliament, with opposition lawmakers from both the left and right demanding companies reaping windfalls be taxed, to benefit the greater population.Over the first half of the year, TotalEnergies made $10 billion in profit and Exxon Mobil raked in $18 billion. Western oil and gas companies have generated record profits thanks to booming energy prices, which have risen because of the war in Ukraine and allowed Russia to rake in billions in revenues even as it cuts oil and gas supplies to Europe. A recent OPEC Plus deal involving Saudi Arabia and Russia to cut production is likely to further raise prices.Earlier this week, Exxon Mobil announced that it had come to an agreement with two of four unions working at its sites, “out of a desire to urgently and responsibly to put an end to the strikes.” But the wage increase was one percentage point less than CGT had demanded, and half the bonus.In its own news release, TotalEnergies said the company continued to aim for “fair compensation for the employees” and to ensure they benefited “from the exceptional results generated” by the company.On Friday, two unions at TotalEnergies announced they had reached a deal for a 7 percent wage increase and a bonus. But CGT, which has demanded a 10 percent hike, walked out of the negotiation and said it would continue the strike.To date, Mr. Macron has been loath to tax the oil giants’ windfall profits, worrying it would tarnish the country’s investment appeal, and preferring instead that companies make what he termed a “contribution.”However, last week the government introduced an amendment to its finance bill, in keeping with new European Union measures, applying a temporary tax on oil, gas and coal producers that make 20 percent more in profit on their French operations than they did during recent years.On Thursday, France’s Finance Minister Bruno Le Maire also called on TotalEnergies to raise wages for salaried workers. And he announced that 1.7 billion euros, about $1.65 billion, would be earmarked to help motorists if fuel prices continued to rise.“It is a company that is now making significant profits,” Mr. Le Maire told RTL radio station on Thursday. “Total has paid dividends, so the sharing of value in France must be fair.”The pumps at gas stations were wrapped in red and white tape, the electric price signs flashing all nines. Andrea Mantovani for The New York TimesThe tangle of pipes and towering smokestacks of the hulking Total refinery in Gonfreville-l’Orcher, just outside of Le Havre, were eerily silent on Thursday, as union members burned wood pallets, hoisted flags and voted to continue the strike.Many believed their anger captured a building sentiment in the country, where even with generous government subsidies, people are struggling financially and are increasingly anxious about the winter of energy cutbacks. Inflation in France, though lower than in the rest of Europe, has surpassed 6 percent, jacking the prices of some basic supplies like frozen meat, pasta and tissues.“This era must end — the era of hogging for some, and rationing for others,” François Ruffin told the protesters on Thursday. Mr. Ruffin, a filmmaker turned elected official with the country’s hard-left France Unbowed party, rose to prominence with his satirical documentary film about France’s richest man, Bernard Arnault, and the loss of middle-class jobs to globalization.If anything should be requisitioned, it should be the profits of huge companies, not workers, many said at the protest sites.David Guillemard, a striker who has worked at the Total refinery for 22 years, said the back-to-work order had kicked a hornet’s nest. “Instead of calming people,” he said, “this has irritated them.” More

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      Why Social Security’s Inflation Protection Is Priceless

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      Automatically adjusted lifetime income is rare and worth protecting, our columnist says.The 8.7 percent cost-of-living adjustment for Social Security isn’t just a big benefit increase.It’s priceless.You can’t buy inflation-protected lifetime income like that on the open market, not from an entity as solid as the United States government.“People don’t appreciate what a terrific thing Social Security is, in so many ways,” said Charles D. Ellis, an author and investment consultant who has studied Social Security for decades. “The COLA is a reminder: When there is serious inflation, as we have right now, you can count on Social Security taking care of it for you.”If you are an investor, there are many ways of hedging against inflation, like I bonds, which are issued by the Treasury Department and currently pay 9.62 percent interest.But safe, monthly lifetime income that automatically keeps up with inflation? You get that with Social Security.“It’s just what investors need for retirement,” Zvi Bodie, professor emeritus in finance at Boston University, said in an interview. “But, unfortunately, you can’t really get it anywhere else.”How It StartedWhile the market value of Social Security’s inflation-adjusted income can’t be easily priced, it can be evaluated in limited ways.The new COLA is really big — the biggest since 1981, when the adjustment was 11.2 percent. These automatic, yearly inflation increases began in 1975, during a decade of high inflation, when politicians understood that retirees needed help to keep up with rising prices. Before then, it took specific congressional action to raise benefit levels.The first automatic increase was 8 percent in 1975; the highest was 14.3 percent in 1980. The adjustments didn’t drop below 5 percent until 1983, after the Federal Reserve, led by Paul A. Volcker, threw the economy into two successive recessions.Until last year’s 5.9 percent COLA, the previous nine annual adjustments were invariably below 3 percent. Social Security COLAs didn’t command big headlines.More on Social Security and RetirementMedicare Costs: Low-income Americans on Medicare can get assistance paying their premiums and other expenses. This is how to apply.Downsizing in Retirement: People selling their homes often have to shell out more to spend less. Here’s what to consider.Claiming Social Security: Looking to make the most of this benefit? These online tools can help you figure out your income needs and when to file.A Look at the Current NumbersBut high inflation has come back with a vengeance, and the current COLA is welcome for the roughly 70 million people, including retirees and the disabled, who receive Social Security benefits.For someone receiving $1,754 a month — the average monthly benefit for someone retiring in December — the COLA means an increase of about $153 a month, or $1,831 a year.For many people, these increases are absolutely critical.Consider a few statistics.Among older women who receive Social Security retiree or survivor benefits, 42 percent get at least half their income from Social Security. Among older men, 37 percent do. If you are living on Social Security, every cent matters after the price of food has risen 11.2 percent this year, as the latest numbers show.Even for fairly affluent people, the inflation-adjusted payments can be significant.Imagine that your earnings have put you at the high end of the national income distribution for many years. In addition, you have followed the standard advice to maximize benefits by not claiming Social Security until you reach 70. That will get you the maximum retirement benefit for Social Security, which is $4,194 a month, or $50,328 for this year.The inflation adjustment amounts to an annual increase of about $4,379, raising your yearly Social Security benefits to $54,707. And the inflation increase will be compounded, as part of your Social Security income, year after year.I don’t know about you, but the total strikes me as substantial. What’s more, if prices soar next year, there will be another significant inflation adjustment.Most jobs don’t afford this kind of protection, but Social Security is different. You don’t have to convince anyone that your income — now or in the future — ought to keep up with inflation.Social Security may seem irrelevant if you are young. You may believe it’s too early to think about retirement, or you may have been told that Social Security won’t be there for you when you are older.But be aware that these inflation adjustments are likely to affect you.All else being equal — that is, if your promised benefits aren’t cut because of future funding shortfalls — the inflation adjustments will increase what you receive down the road.Now, it’s true that unless Congress takes action, the Social Security Trust Funds are projected to run out of money around 2035. If that happened and Congress did absolutely nothing, the tax revenues coming regularly into the Social Security system would still pay about 80 percent of your promised benefits.But what about the rest of the money?I asked Mr. Ellis. He is a co-author of the book “Falling Short: The Coming Retirement Crisis and What to Do About It.”First, he said, Congress is virtually certain to fully protect people already receiving benefits. “No politician wants to tell older people, who vote in large numbers, that their benefits are being cut,” he said.As for everyone else, it’s important that people understand how valuable these benefits are and make their voices heard, Mr. Ellis said. Social Security has been short on funds before, and the Trust Funds can easily be built up again, much as they were in the 1980s. “I think the more people understand about Social Security,” he said, “the more likely it is that it will be preserved.” An Invaluable Benefit Without a Market PriceAll that said, how much would Social Security be worth if you could buy and sell a lifetime of benefits?You can’t really do this in financial markets, but let’s look more closely.In technical terms, Social Security is a form of an annuity — insurance that pays annual income for the rest of your life (and, for retirees, with benefits for your surviving spouse and children until they reach age 18).Annuities are sold by insurance companies in many shapes and sizes, but they aren’t popular, even though economists often recommend simple, low-cost annuities for safe and stable income.You can buy annuities that will increase their payouts by, say, 3 percent every year, but none are available now that include full cost-of-living adjustments like Social Security.There are two reasons for this, said Wade Pfau, a professor of retirement income at the American College of Financial Services. First, inflation was so low for so long that there was little demand for them, and the market withered. Second, as the current inflation surge demonstrates, “no one can accurately predict inflation, and it’s extremely difficult for insurance companies to make long-term projections and price the annuities properly,” he said.Ariel Stern, the chief operating officer of ImmediateAnnuities.com, which provides estimates of annuity costs, identified the only person who had ever used the service to buy an annuity with a full COLA. That was Jim Oatman, a 73-year-old actuary in Arizona, who purchased one from Principal for himself and his wife in 2018, shortly before Principal, the last company to offer such annuities, stopped selling them.In a telephone interview, Mr. Oatman said he had paid $200,000 for the annuity. Its monthly payouts started at $602 in early 2019. That was about half of what he said he could have gotten in monthly payments for an annuity without an inflation adjustment.“It’s expensive, but I’m a numbers guy, and I remember the 1970s and wanted the protection,” Mr. Oatman said. One COLA increased the payments to $635 a month, and another, bigger “bump” will come in November, he said, but added ruefully, “It will take years of inflation for me to catch up to what I would have had without that inflation adjustment.”Still, “it’s a risk thing,” he said. “If inflation goes very high for several years running, I’m going to feel like the smartest guy around.”Even when you could buy an annuity like that, the market was tiny. In addition, interest rates were lower a few years ago, and payouts for annuities were lower, too. For these reasons, we can’t really use Mr. Oatman’s annuity to come up with reliable market pricing for Social Security benefits.In addition, no private company is directly comparable to the U.S. government, which, even with its manifest problems, is backed by the world’s largest economy and most powerful military. In theory, the government should be safer than a mere corporation — if not for Social Security funding’s politics-induced uncertainty, which economists have been measuring for years.Still, for a ballpark estimate, it seems safe to say that as an annuity on the open market, the average monthly Social Security benefit awarded in December, even without that invaluable COLA, would be worth close to $300,000 and probably much more, based on estimates from ImmediateAnnuites.com.Even at the low end, that’s more than double the $144,000 that the average household had in 401(k) and individual retirement accounts in 2019, according to the most recent estimates provided by Anqi Chen, a senior research economist of the Center for Retirement Research at Boston College. The inflation adjustment has immeasurable value on top of that.If you are fairly affluent, consider this.As an annuity, the maximum Social Security benefit without any COLA would be worth at least $665,000 and as much as $909,000. Adding a COLA of any kind would push its value to $1 million, and much more than that for a full inflation adjustment linked to the Consumer Price Index, like Social Security’s.If anything, these numbers understate Social Security’s monetary value. They are intended merely to give you an appreciation of benefits that are, really, priceless.Anything that precious needs to be preserved.By all means, put away as much money as you can and invest it wisely.But these estimates suggest that the most important steps most Americans can take to fortify their retirement involve Social Security.Work as long as you can at a job you enjoy, and delay claiming Social Security until as late as possible — ideally, until you turn 70. That’s just a start.You must pay Social Security taxes your entire working life. If you want to collect what you are owed when the time comes, make it crystal clear to the political class that you expect every cent of the Social Security benefits you have been promised. 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      Your Friday Briefing: U.S. Inflation Keeps Soaring

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      Plus Europe’s search for energy and U.S. attempts to hinder China’s technological development.Karl RussellU.S. inflation keeps soaringConsumer prices climbed far more quickly than expected in the U.S., grim news for the Federal Reserve as it tries to bring the most rapid price increases in four decades under control.Overall inflation climbed 8.2 percent in the year through September, more than some economists expected, and prices increased 6.6 percent after stripping out fuel and food, the so-called core index. That is a new high for the core index this year, and the fastest pace of annual increase since 1982.Fed officials are closely watching the monthly numbers, which give a clearer snapshot of how prices are evolving in real time. They offered more reasons to worry: Overall inflation climbed 0.4 percent in September, much more than last month’s 0.1 percent reading, and the core index climbed 0.6 percent, matching a big increase in the prior month. Takeaways: The disappointing inflation data is most likely bad news for Democrats ahead of the midterm elections. What’s next: A sixth round of rate hikes from the Federal Reserve this year looks likely. Central bankers have signaled that they will consider an increase of up to three-quarters of a point at their next meeting in November.Eckardt Heukamp’s farm is the last in Lützerath.Ingmar Nolting for The New York TimesScrounging for energy in EuropeRussia’s invasion of Ukraine has left many Ukrainian cities in ruins. The war could also mean the end for a German farming village.Lützerath sits next to a coal mine and atop a large coal deposit, which the German government hopes to mine to make up for a looming shortage of cheap Russian gas, which Germany normally relies on for heat in the winter. Germany has pledged to wean itself off coal by 2030. Germans have traditionally been supportive of clean energy, and energy experts suggest that Lützerath’s coal is not necessary. But there has been little public backlash to destroying the village, and many Germans seem to have accepted that coal will be an important part of their near-term energy future.The State of the WarA Large-Scale Strike: President Vladimir V. Putin of Russia unleashed a series of missile strikes that hit at least 10 cities across Ukraine, including Kyiv, in a broad aerial assault against civilians and critical infrastructure that drew international condemnation and calls for de-escalation.Crimean Bridge Explosion: Mr. Putin said that the strikes were retaliation for a blast that hit a key Russian bridge over the weekend. The bridge, which links the Crimean Peninsula to Russia, is a primary supply route for Russian troops fighting in the south of Ukraine.Pressure on Putin: With his strikes on civilian targets in Ukraine, Mr. Putin appears to be responding to his critics at home, momentarily quieting the clamors of hard-liners furious with the Russian military’s humiliating setbacks on the battlefield.Arming Ukraine: The Russian strikes brought new pledges from the West to send in more arms to Ukraine, especially sophisticated air-defense systems. But Kyiv also needs the Russian-style weapons that its military is trained to use, and the global supply of them is running low.In Moscow, Russia’s president Vladimir Putin offered to export more gas to Europe via Turkey, potentially turning the country into a regional supply hub and solidifying Russia’s hold over Europe’s energy markets.In Paris, Parkour enthusiasts are saving energy by using superhero-like moves to turn off lights burning all night outside stores.In Ukraine, more than three dozen people have died in the past four days during Russia’s missile barrage. NATO’s secretary general vowed to “stand by Ukraine for as long as it takes,” and the E.U. announced that it planned to train Ukrainian soldiers on the union’s soil.A semiconductor factory in Nantong, China.Agence France-Presse — Getty ImagesThe U.S. push to hinder China’s technological developmentThe Biden administration wants to limit the Chinese military’s rapid technological development by choking off China’s access to advanced chips. China has been using supercomputing and artificial intelligence to develop stealth and hypersonic weapons systems, and to try to crack the U.S. government’s most encrypted messaging, according to intelligence reports. Last week, the administration unveiled what appear to be the most stringent U.S. government controls on technology exports to China in a decade, technology experts said.In dozens of interviews with officials and industry executives, my colleagues Ana Swanson and Edward Wong detailed how this policy came together. The administration spent months trying to convince allies like the Dutch, Japanese, South Korean, Israeli and British governments to announce restrictions alongside the U.S. But some of those governments feared retaliation from China, one of the world’s largest technology markets. Eventually, the Biden administration decided to act alone.Details: U.S. officials described the decision to push ahead with export controls as a show of leadership. They said some allies wanted to impose similar measures but were wary of antagonizing China; the rules from Washington that target foreign companies did the hard work for them.What’s next: The controls could be the beginning of a broad assault by the U.S. government. “This marks a serious evolution in the administration’s thinking,” said Matthew Pottinger, a deputy national security adviser in the Trump administration.THE LATEST NEWSAsiaStudents wearing hijabs were denied entry into Mahatma Gandhi Memorial College in Udupi, India, in February.Aijaz Rahi/Associated PressAn Indian Supreme Court panel was divided over a state’s ban on hijabs in schools, leaving it in place for now, Reuters reports.Keith Bradsher, The Times’s Beijing bureau chief, discusses what China’s struggle with Covid means before its important Communist Party congress.North Korea said it practiced firing two long-range cruise missiles on Wednesday that could be used as nuclear weapons, Reuters reports.World NewsA conservation biologist in Mérida State, Venezuela, in April. Miguel Zambrano/Agence France-Presse — Getty ImagesThe Living Planet Index concluded that monitored populations of wild vertebrates had declined on average by nearly 70 percent from 1970 to 2018. It’s a staggering figure, but a complicated one, too. A large-scale study in Scotland found that four out of 10 people infected with Covid said they had not fully recovered months later.The Iraqi Parliament elected a new president less than an hour after rockets targeted the Green Zone, where Parliament is based.Saudi Arabia pushed back against American threats of consequences for the kingdom’s cutting oil output with Russia and other countries, saying that the move was purely economic.What Else Is HappeningThe U.S. Supreme Court rejected a request from Donald Trump to intervene in litigation over classified documents seized from his Florida estate — a stinging rebuke to the former president. A jury sentenced the man who killed 17 people in 2018 at his former high school in Parkland, Fla., to life in prison instead of the death penalty. Follow our live coverage.The U.S. House of Representatives committee investigating the Capitol insurrection plans to subpoena Donald Trump, an aggressive move that will likely be futile. Here is our live coverage.A Morning ReadAn erect-crested penguin colony on Antipodes Island has been observed by a research team since 1998.Tui De Roy/NPL/Minden PicturesErect-crested penguins that inhabit the harsh Antipodes Islands in the South Pacific have a strange parenting move — laying an egg that’s doomed to die. Researchers don’t know why.Lives LivedAndy Detwiler lost his arms as a child and learned how to use his feet to drive a tractor, feed animals and custom-build farm equipment. He ran 300-acres of farmland and became a YouTube star.FOCUS ON CLIMATE Saving food, and the climateFood waste rotting in a landfill produces methane gas, which quickly heats up the planet. Worldwide, food waste accounts for 8 to 10 percent of global greenhouse gas emissions, at least double that of emissions from aviation. A lot of it doesn’t need to be there: Thirty-one percent of food that is grown, shipped or sold is wasted. To slow global warming and feed people, governments and entrepreneurs are coming up with different ways to waste less food, writes my colleague Somini Sengupta. In California, grocery stores must donate food that’s edible but would otherwise be trashed; supermarket chains in Britain have done away with expiration dates on produce; and in South Korea, a campaign to end food waste in landfills has been underway for nearly 20 years.Food waste in South Korea declined from nearly 3,400 tons a day in 2010 to around 2,800 tons a day in 2019. In the latest experiment, the government has rolled out trash bins equipped with radio-frequency identification sensors that weigh exactly how much food waste each household tosses each month.PLAY, WATCH, EATWhat to CookRomulo Yanes for The New York Times. Food Stylist: Vivian Lui.Dried porcini mushrooms, fresh fennel and leeks provide deep umami flavor to this version of a classic French onion soup.What to ReadGeorge Saunders’s new short-story collection “Liberation Day” is littered with characters who are merely waiting for the final crashing down of the system.What to WatchThe animated documentary “Eternal Spring” revisits an incident when members of Falun Gong hijacked local television programming in China. Now Time to PlayPlay the Mini Crossword, and a clue: ♫ ♫ ♫ (5 letters).Here are the Wordle and the Spelling Bee.You can find all our puzzles here. You could also learn to play the piano, on a budget digital keyboard recommended by Wirecutter.That’s it for this week’s morning briefings. Have a great weekend. — DanP.S. “We Were Three,” a new podcast from The Times and Serial Productions, is an intimate look at a family in the aftermath of the pandemic.The latest episode of “The Daily” is an update on N, an Afghan teenager who escaped an arranged marriage to a Taliban member.You can reach Dan and the team at briefing@nytimes.com. More

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      Biden Warns Inflation Will Worsen if Republicans Retake Congress

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      HAGERSTOWN, Md. — President Biden laced into Republicans on Friday for trying to enact policies that would make “every kitchen table cost” go up while lavishing tax cuts on big corporations, shedding his usual tone of bipartisanship a month ahead of the midterm elections.In a speech before factory workers at a Volvo manufacturing facility, Mr. Biden defended his economic record and accused Republicans of political hypocrisy for seeking to reap the benefit of federal funds made available by legislation that they had opposed. He also laid out the stakes of the upcoming elections, bluntly warning that Republicans will try to scale back Medicare and Social Security benefits if they win control of Congress. And he accused Republicans of rooting against America’s economic success.“This is a choice between two very different ways of looking at the economy,” Mr. Biden said.Mr. Biden’s comments came as Labor Department figures showed that the United States economy added 263,000 jobs in September and that the unemployment rate fell to 3.5 percent, from 3.7 percent a month earlier. The report suggests that the labor market is cooling as the Federal Reserve raises interest rates but that the central bank will likely have to take further steps to slow the economy in order to tame inflation.Mr. Biden said that the numbers were a sign that the economy was transitioning to stable growth.“Our job market continues to show resilience as we navigate through this economic transition,” he said. “The pace of job growth is cooling while still powering our recovery forward.”Despite concerns about an economic slowdown, Mr. Biden’s remarks were the latest attempt by the White House to highlight examples of America’s manufacturing resurgence with a focus on the automobile sector in the run-up to the November midterm elections.The State of the 2022 Midterm ElectionsWith the primaries over, both parties are shifting their focus to the general election on Nov. 8.Standing by Herschel Walker: After a report that the G.O.P. Senate candidate in Georgia paid for a girlfriend’s abortion in 2009, Republicans rallied behind him, fearing that a break with the former football star could hurt the party’s chances to take the Senate.Wisconsin Senate Race: Mandela Barnes, the Democratic candidate, is wobbling in his contest against Senator Ron Johnson, the Republican incumbent, as an onslaught of G.O.P. attack ads takes a toll.G.O.P. Senate Gains: After signs emerged that Republicans were making gains in the race for the Senate, the polling shift is now clear, writes Nate Cohn, The Times’s chief political analyst.Democrats’ Closing Argument: Buoyed by polls that show the end of Roe v. Wade has moved independent voters their way, vulnerable House Democrats have reoriented their campaigns around abortion rights in the final weeks before the election.The Volvo facility in Hagerstown employs more than 1,700 workers and makes parts for Mack Trucks.The visit also came with political calculations, as Representative David Trone, a Maryland Democrat, was locked in a tight re-election race with his Republican challenger, Neil Parrott. Hagerstown is also close to the border with Pennsylvania, where the senate and governor’s races are two of the most consequential political contests in the country.Mr. Biden maintained a more pointed tone with Republicans as he made claims about the benefits of the so-called Inflation Reduction Act that Congress passed in August. He called out Republicans such as Representative Paul Gosar of Arizona and Representative Andy Barr of Kentucky for seeking federal funds for local projects while criticizing his agenda, calling it “socialism.”.css-1v2n82w{max-width:600px;width:calc(100% – 40px);margin-top:20px;margin-bottom:25px;height:auto;margin-left:auto;margin-right:auto;font-family:nyt-franklin;color:var(–color-content-secondary,#363636);}@media only screen and (max-width:480px){.css-1v2n82w{margin-left:20px;margin-right:20px;}}@media only screen and (min-width:1024px){.css-1v2n82w{width:600px;}}.css-161d8zr{width:40px;margin-bottom:18px;text-align:left;margin-left:0;color:var(–color-content-primary,#121212);border:1px solid var(–color-content-primary,#121212);}@media only screen and (max-width:480px){.css-161d8zr{width:30px;margin-bottom:15px;}}.css-tjtq43{line-height:25px;}@media only screen and (max-width:480px){.css-tjtq43{line-height:24px;}}.css-x1k33h{font-family:nyt-cheltenham;font-size:19px;font-weight:700;line-height:25px;}.css-ok2gjs{font-size:17px;font-weight:300;line-height:25px;}.css-ok2gjs a{font-weight:500;color:var(–color-content-secondary,#363636);}.css-1c013uz{margin-top:18px;margin-bottom:22px;}@media only screen and (max-width:480px){.css-1c013uz{font-size:14px;margin-top:15px;margin-bottom:20px;}}.css-1c013uz a{color:var(–color-signal-editorial,#326891);-webkit-text-decoration:underline;text-decoration:underline;font-weight:500;font-size:16px;}@media only screen and (max-width:480px){.css-1c013uz a{font-size:13px;}}.css-1c013uz a:hover{-webkit-text-decoration:none;text-decoration:none;}How Times reporters cover politics. We rely on our journalists to be independent observers. So while Times staff members may vote, they are not allowed to endorse or campaign for candidates or political causes. This includes participating in marches or rallies in support of a movement or giving money to, or raising money for, any political candidate or election cause.Learn more about our process.“I didn’t know there were that many socialist Republicans,” Mr. Biden joked.Mr. Biden, who on Thursday evening attended a fund-raiser at the Manhattan home of the Democratic donor James Murdoch, said that Republicans have a “Park Avenue” view of the world that stands in stark contrast to his policies that are born out of concern for people in places like Scranton, Pa., where Mr. Biden was born, and Hagerstown.Republicans seized on signs of a cooling job market to assail Mr. Biden for economic mismanagement on Friday.“The economy is shrinking, inflation is raging, and job growth is slowing,” said Representative Kevin Brady of Texas, the top Republican on the House Ways and Means Committee.While the White House has so far sounded very in line with the Fed’s push to fight the quickest inflation in four decades, that tone could shift somewhat as the economy begins to show cracks.The Biden administration has made it clear that it respects the Fed’s independence to set policy free of partisan interference, but it might be challenging for administration officials to embrace the central bank’s actions too loudly when the Fed’s policies are hurting the economy and inflicting pain on workers.Mr. Biden acknowledged that economic headwinds continued to persist, noting that gasoline prices are inching back up “because of what the Russians and the Saudis just did.”“I’m not finished with that just yet,” he added.Despite his sharper tone, Mr. Biden said that he remained hopeful that bipartisan cooperation could be possible after the election.“That’s my hope, that after this election, there will be a little return to sanity,” Mr. Biden said. “That we’ll stop this bitterness that exists between the parties and have people working together.” More

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      Democrats’ Troubles in Nevada Are a Microcosm of Nationwide Headwinds

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      Inflation and a rocky economy are bolstering Republicans in their races against incumbent Democrats, motivating “an electorate that simply wants change,” as one G.O.P. consultant says.LAS VEGAS — The Culinary Workers Union members who are knocking on doors to get out the vote are on the cursed-at front lines of the Democratic Party’s midterm battle.Most voters do not open their doors. And when some do answer, the canvassers might wish they hadn’t.“You think I am going to vote for those Democrats after all they’ve done to ruin the economy?” a voter shouted one evening last week from her entryway in a working-class neighborhood of East Las Vegas.Miguel Gonzalez, a 55-year-old chef who described himself as a conservative Christian who has voted for Republicans for most of his life, was more polite but no more convinced. “I don’t agree with anything Democrats are doing at all,” he said after taking a fistful of fliers from the union canvassers.Those who know Nevada best have always viewed its blue-state status as something befitting a desert: a kind of mirage. Democrats are actually a minority among registered voters, and most of the party’s victories in the last decade were narrowly decided. But the state has long been a symbolic linchpin for the party — vital to its national coalition and its hold on the blue West.Now, Democrats in Nevada are facing potential losses up and down the ballot in November and bracing for a seismic shift that could help Republicans win control of both houses of Congress. Senator Catherine Cortez Masto remains one of the most vulnerable Democratic incumbents in the country. Gov. Steve Sisolak is fighting his most formidable challenger yet. And the state’s three House Democrats could all lose their seats.The Democratic juggernaut built by former Senator Harry M. Reid is on its heels, staring down the most significant spate of losses in more than a decade. More

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      Why the British Pound Continues to Sink

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      Britain’s pound coin — rimmed in nickel and brass with an embossed image of Queen Elizabeth II at the center — could always be counted on to be significantly more valuable than the dollar.Such boasting rights effectively came to an end this week when the value of the pound sank to its lowest recorded level: £1 = $1.03 after falling more than 20 percent this year.The nearly one-to-one parity between the currencies sounded the close of a chapter in Britain’s history nearly as much as the metronomic footfalls of the procession that carried the queen’s funeral bier up the pavement to Windsor Castle.“The queen’s death for many people brought to an end a long era of which the soft power in the United Kingdom” was paramount, said Ian Goldin, professor of globalization and development at the University of Oxford. “The pound’s demise to its lowest level is sort of indicative of this broader decline in multiple dimensions.”The immediate cause of the pound’s alarming fall on Monday was the announcement of a spending and tax plan by Britain’s new Conservative government, which promised steep tax cuts that primarily benefited the wealthiest individuals along with expensive measures to help blunt the painful rise in energy prices on consumers and businesses.The sense of crisis ramped up Wednesday when the Bank of England intervened, in a rare move, and warned of “material risk to U.K. financial stability” from the government’s plan. The central bank said it would start buying British government bonds “on whatever scale is necessary” to stem a sell-off in British debt.The Bank of England’s emergency action seemed at odds with its efforts that began months ago to try to slow the nearly 10 percent annual inflation rate, which has lifted the price of essentials like petrol and food to painful levels.Rising Inflation in BritainInflation Slows Slightly: Consumer prices are still rising at about the fastest pace in 40 years, despite a small drop to 9.9 percent in August.Interest Rates: On Sept. 22, the Bank of England raised its key rate by another half a percentage point, to 2.25 percent, as it tries to keep high inflation from becoming embedded in the nation’s economy.Energy Bills to Soar: Gas and electric charges for most British households are set to rise 80 percent this fall, further squeezing consumers and stoking inflation.Investor Worries: The financial markets have been grumbling with unease about Britain’s economic outlook. The government plan to freeze energy bills and cut taxes is not easing concerns.The swooning pound this week has carried an unmistakable political message, amounting to a no-confidence vote by the world’s financial community in the economic strategy proposed by Prime Minister Liz Truss and her chancellor of the Exchequer, Kwasi Kwarteng.To Mr. Goldin, the pound’s journey indicates a decline in economic and political influence that accelerated when Britain voted to leave the European Union in 2016. In many respects, Britain already has the worst performing economy, aside from Russia, of the 38-member Organization for Economic Cooperation and Development.“It’s just a question of time before it falls out of the top 10 economies in the world,” Mr. Goldin said. Britain ranks sixth, having been surpassed by India.Eswar Prasad, an economist at Cornell University, said this latest plunge had delivered a bracing blow to Britain’s standing. A series of “self-inflicted wounds,” including Brexit and the government’s latest spending plan, have accelerated the pound’s slide and further endangered London’s status as a global financial center.Dozens of currencies, including the euro, the Japanese yen and the Chinese renminbi, have slumped in recent weeks. Rising interest rates and a relatively bright economic outlook in the United States combined with turmoil in the global economy have made investments in dollars particularly appealing.But the revival by the Truss government of an extreme version of Thatcher and Reagan-era “trickle-down” economic policies elicited a brutal response.“The problem isn’t that the U.K. budget was inflationary,” wrote Dario Perkins, a managing director at TS Lombard, a research firm, on Twitter. “It’s that it was moronic.”To some, the pound’s journey indicates a decline in Britain’s economic and political influence.Suzie Howell for The New York TimesDuring the more than 1,000 years in which the pound sterling has reigned as Britain’s national currency, it has suffered its share of ups and downs. Its value in the modern era could never match the value of an actual pound of silver, which in the 10th century could buy 15 cows.Over the centuries, British leaders have often gone to extraordinary lengths to protect the pound’s value, viewing its strength as a sign of the country’s economic power and influence. King Henry I issued a decree in 1125 ordering that those who produced substandard currency “lose their right hand and be castrated.”In the 1960s, the Labour government under Harold Wilson so resisted devaluing the pound — then set at a fixed rate of $2.80, high enough to be holding back the British economy — that he ordered cabinet papers discussing the idea to be burned. In 1967, the government finally cut its value by 14 percent to $2.40.Other economic crises thrashed the pound. In the 1970s, when oil prices skyrocketed and Britain’s inflation rate topped 25 percent, the government was compelled to ask the International Monetary Fund for a $3.9 billion loan. In the mid-1980s, when high U.S. interest rates and a Reagan administration spending spree jacked up the dollar’s value, the pound fell to a then record low.The pound’s dominance has been waning since the end of World War II. Today, the global economy is experiencing a particularly tumultuous time as it recovers from the aftermath of the coronavirus pandemic, supply chain breakdowns, Russia’s invasion of Ukraine, an energy shortage and soaring inflation.As Richard Portes, an economics professor at London Business School, said, currency exchanges have enormous swings over time. The euro was worth 82 cents in its early days, he recalled, and people referred to it as a “toilet paper” currency. But by 2008, its value had doubled to $1.60.What might cause the pound to revive is not clear.The Truss government’s economic program has forcefully accelerated the pound’s slide — the latest in a series of what many economists consider egregious economic missteps that peaked with Brexit.Much depends on the Truss government.“The plunge in the pound is the result of policy choices, not some historical inevitability” said Ian Shepherdson, chief U.S. economist at Pantheon Macroeconomics. “Whether this is a new, grim era or just an unfortunate interlude depends on whether they reverse course or are kicked out at the next election.”As it happens, the Bank of England is preparing to issue new pound bank notes and coins featuring King Charles III, at the very moment that the pound has dropped to record lows.“The death of the queen and the fall of the pound do seem jointly to signify decisively the end of an era,” Mr. Prasad of Cornell said. “These two events could be considered markers in a long historical procession in the British economy and the pound sterling becoming far less important than they once were.” More

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      Truss Takes a Bold Economic Gamble. Will It Sink Her Government?

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      Three weeks into her term, Prime Minister Liz Truss’s financial plans have thrown the markets and Britain’s currency into chaos and put her future in peril.LONDON — Prime Minister Liz Truss of Britain campaigned as a tax cutter and champion of supply-side economics, and she won the race to replace her scandal-scarred predecessor, Boris Johnson. Now she has delivered that free-market agenda, and it may sink her government.Four days after Ms. Truss’s tax cuts and deregulatory plans stunned financial markets and threw the British pound into a tailspin, the prime minister’s political future looks increasingly precarious as well.Her Conservative Party is gripped by anxiety, with a new poll showing that the opposition Labour Party has taken a 17 percentage point lead over the Tories. It’s a treacherous place for a prime minister in only her third week on the job.Labour is seizing the moment to present itself as the party of fiscal responsibility. With some experts predicting the pound could tumble to parity with the dollar, economists and political analysts said the uncertainty over Britain’s economic path would continue to hang over the markets and Ms. Truss’s government.“It’s entirely possible she could be replaced before the next election,” said Tim Bale, a professor of politics at Queen Mary University of London, who is an expert on the Conservative Party. “It would be very, very difficult to conduct a full-blown leadership contest again, but I wouldn’t rule anything out.”That Ms. Truss should find herself in this predicament so soon after taking office attests to both the radical nature and awkward timing of her proposals. Cutting taxes at a time of near-double-digit inflation, when central banks in London and elsewhere are raising interest rates, was always going to mark Britain as an economic outlier.But the government compounded the shock last Friday when the chancellor of the Exchequer, Kwasi Kwarteng, unexpectedly announced that the government would also abolish the top income tax rate of 45 percent applied to those earning more than 150,000 pounds, or about $164,000, a year.And Mr. Kwarteng did not submit the package to the scrutiny a government budget normally receives, deepening fears that the tax cuts, without corresponding spending cuts, will blow a hole in Britain’s public finances.Cutting taxes at a time of near-double-digit inflation, when central banks in London and worldwide are raising interest rates, has made Britain an economic outlier.Carl Court/Getty ImagesOn Tuesday, the pound stabilized briefly against the dollar, as did 10-year rates on British government bonds, though both began to gyrate later in the day after a senior official at the Bank of England signaled an aggressive rise in interest rates.The International Monetary Fund, which bailed out Britain in 1976, added to the deepening sense of anxiety when it urged the British government to reconsider the tax cuts. In a statement, it said the cuts would exacerbate inequality and lead to fiscal policy and monetary policy working at “cross purposes.”Rising Inflation in BritainInflation Slows Slightly: Consumer prices are still rising at about the fastest pace in 40 years, despite a small drop to 9.9 percent in August.Interest Rates: On Sept. 22, the Bank of England raised its key rate by another half a percentage point, to 2.25 percent, as it tries to keep high inflation from becoming embedded in the nation’s economy.Energy Bills to Soar: Gas and electric charges for most British households are set to rise 80 percent this fall, further squeezing consumers and stoking inflation.Investor Worries: The financial markets have been grumbling with unease about Britain’s economic outlook. The government plan to freeze energy bills and cut taxes is not easing concerns.Already, the specter of higher interest rates was causing the housing market to seize up. Two major British mortgage lenders announced that they would stop offering new loans because of the market volatility. Higher rates will hurt hundreds of thousands of homeowners who need to refinance fixed-term mortgages — property owners, analysts noted, who are the bedrock of the Conservative Party.“It’s not like the U.S., where people are on 30-year mortgages,” said Jonathan Portes, a professor of economics and public policy at King’s College London.An estimated 63 percent of mortgage holders have either floating rate mortgages or loans that will expire in the next two years. And the steep decline of the pound means that interest rates will have to rise even further than they would have merely to curb inflation.Ms. Truss, he said, could have taken a more cautious approach: rolling out the supply-side measures first, like plans to untangle Britain’s cumbersome residential planning rules and build more housing, which are hurdles to economic growth. Then, when inflationary pressures had eased, the government could have cut taxes.But that was never in the cards, Professor Portes said, because Ms. Truss and Mr. Kwarteng are free-market evangelists who ardently believe that cutting taxes will reignite growth, and because they have little more than two years to turn around the economy before they face voters in a general election.“This is ‘shock and awe,’” he said. “Truss, Kwarteng, and the people around them think they had to act quickly. The longer they wait, the more the resistance will build up.”Kwasi Kwarteng, Britain’s chancellor of the Exchequer, announced tax cuts that some fear will blow a hole in Britain’s public finances.Clodagh Kilcoyne/ReutersDuring the campaign, Ms. Truss modeled herself on Margaret Thatcher, who also announced a series of free-market measures after taking office as prime minister and endured a turbulent couple of years. Unlike Ms. Truss, though, Thatcher worried about curbing inflation and shoring up public finances; she even raised some taxes during a recession in 1981 before reducing them in later years.But Thatcher came in after an election victory over an exhausted Labour government, which gave her more time to weather the downturn and for her deregulatory measures to take effect. She also got a lift after Britain vanquished Argentina in the Falklands War in 1982, which uncorked a surge of patriotism.“Thatcher was thinking in 1979 that I only need to give voters something they like by 1982,” said Charles Moore, a former editor of The Daily Telegraph who wrote a three-volume biography of the former prime minister. “Liz Truss hasn’t got this amount of time.”The better analogy to Ms. Truss, he said, is Ronald Reagan, with his emphasis on tax cuts and other supply-side policies, as well as his relative lack of concern for their effect on public deficits. Like Thatcher, Reagan weathered a recession before the United States began growing again in 1983. And like her, he had a cushion before he had to face voters.Ms. Truss, by contrast, has taken office after 12 years of Conservative-led governments, and three years into Mr. Johnson’s tenure. She will have to call an election by the beginning of 2025, at the latest. The Labour Party, which had been divided by Brexit and internal disputes, has been galvanized by the new government’s chaotic start, in particular Mr. Kwarteng’s plan to cut the top tax rate, which has allowed Labour to stake out a clear contrast on issues of economic equity.Speaking at the party’s annual conference in Liverpool on Tuesday, the Labour leader, Keir Starmer, declared that the Conservatives “say they do not believe in redistribution. But they do — from the poor to the rich.”Keir Starmer’s Labour Party is seizing the moment to present itself as the party of fiscal responsibility.Henry Nicholls/ReutersLabour’s lead of 17 percentage points in a new poll by the market research firm, YouGov, is the largest advantage it has had over the Conservatives in two decades. The Tories won the support of just 28 percent of those surveyed, raising questions about its ability to hold on to its existing seats, according to Professor Bale.That forbidding political landscape only adds to the challenge facing Ms. Truss. For the tax cuts to have one of their desired effects — which is to encourage businesses to invest more — economists said companies would need some reassurance that the policy is not going to be reversed by a new government in two years.“This is a very inexperienced government swinging for the fences in a situation where Labour is the strong favorite in the next election, if they don’t swing too far left,” said Kenneth S. Rogoff, a professor of economics at Harvard. “If one believes that the tax cuts are going to be reversed under Labour, and that there is a high chance of a Labour government, why would they influence long-term investment?”Britain, Professor Rogoff said, was also rowing against much greater forces in the global economy. After years of low inflation and extremely low interest rates, the flood of public spending because of the coronavirus pandemic has brought back the scourge of inflation and a shift toward higher rates.“The verdict will almost certainly be that governments borrowed too much and should have raised taxes on the wealthy more,” he said.In the short term, Ms. Truss is likely to find herself increasingly at odds with the Bank of England. The bank was already expected to raise rates at its next meeting in November. On Tuesday, its chief economist, Huw Pill, said the government’s new fiscal policies would require a “significant monetary policy response.”Adam S. Posen, an American economist who once served on the Bank of England’s monetary policy committee, said, “The government’s policies are not only outrageously irresponsible, but they don’t seem to understand that the bank has to respond to these policies by raising interest rates a lot.”The Bank of England, like many other banks worldwide, is expected to raise rates at its meeting next month.Andy Rain/EPA, via ShutterstockMr. Posen, who is the president of the Peterson Institute of International Economics, likened Britain’s loss of credibility in the markets to that of Britain and other European countries in the 1970s and Latin American countries in the 1980s. The best course, he said, would be for the government to reverse its fiscal policy, though he said Ms. Truss and Mr. Kwarteng seemed “willfully committed to it.”Certainly, they have given no indication that they plan to back down. On Tuesday, Mr. Kwarteng told bankers and asset managers that he was confident the government’s plan would work.After the turmoil that led to Mr. Johnson’s ouster in July, and the protracted contest to replace him, few in the Conservative Party have the stomach to move against Ms. Truss now. But analysts note that the new prime minister has a shallow reservoir of support among lawmakers. Barely a third of them voted for her in the final ballot against her primary opponent, Rishi Sunak, and she won the subsequent vote among party members by a closer margin than expected.Taking note of the new YouGov poll, Huw Merriman, a Conservative lawmaker, may have spoken for many of his colleagues when he said on Twitter, “Those of us who backed Rishi Sunak lost the contest, but this poll suggests that the victor is losing our voters with policies we warned against.”“For the good of our country, and the livelihoods of everyone in our country,” he added, “I still hope to be proven wrong.” More