A look at the British economy after the death of Queen Elizabeth II

The death of Queen Elizabeth II marks the beginning of a new era for the United Kingdom but one that will be fraught with economic uncertainty and mixed patriotic sentiments. Queen Elizabeth died on Thursday, September 8th, at 96, the longest-reigning monarch of the United Kingdom.

Thousands of Britons gathered outside Buckingham Palace in torrential rain after news of her death to pay their respects and condolences to the Queen’s soul.

The Queen’s rule spanned 70 years in the aftermath of World War II, witnessing the collapse of Britain’s vast empire, the vote to leave the European Union in 2016, and the global coronavirus pandemic, symbolizing her rule as a rare constant in a world of constant change.

Elizabeth will succeed her eldest son, proclaimed King Charles III hours after her death.
Political events will stop during approximately 10 days of mourning for the Queen and until her funeral.

The suspension of events comes a few days after the inauguration of the United Kingdom’s new Prime Minister, Liz Truss, who was appointed by the Queen herself on Tuesday, September 6th. At a time of volatility unique to Britain, it inherited a country saddled with its worst economic prospects in years, a deep energy crisis and rising inequality.

Hours before the Queen’s death, Truss began outlining her plans to combat the UK’s cost-of-living crisis and unveiled a broad stimulus package designed to help Britons with soaring energy bills after the Russian war in Ukraine.

The British Treasury said the package, which is set to cost more than 100 billion pounds, will cut peak inflation by 4-5 percentage points. But economists have warned that the move could complicate the Bank of England’s already huge task of curbing high prices to record levels by stimulating spending on goods and wages.

Last month, the British Central Bank made the most significant interest rate increase in 27 years. It raised the benchmark index to 1.75%, in an attempt to reduce inflation, which is currently the highest among the Group of Seven countries at 10.1%.

Investors were widely expecting an additional 50bps hike when the BoE meets next weeks, but some are now saying it will have to raise rates higher and more quickly. The Bank of England (BoE) announced on Friday that they postponed the interest rate announcement by a week to September 22 from September 15, as reported by Reuters.

The uncertain outlook comes as the country faces rising recession risks. Goldman Sachs warned last week that the UK could fall into a recession in the last quarter of this year, echoing earlier forecasts from the Bank of England.

Britons are now preparing for a tough winter for both homes and businesses.

Over the past several months, the British pound has already taken a downward path and reached a 37-year low of $1.1469 on Wednesday, September 7th.