Treasury chief Kwasi Kwarteng announced the sweeping tax cuts that he said would boost economic growth and generate increased revenue without introducing corresponding spending reductions. He also said previously announced plans to cap soaring energy bills for homes and businesses would be financed through borrowing.
Kwarteng offered few details on the costs of the program or its impact on the government's own targets for reducing deficits and borrowing, but one independent analysis expected it to cost taxpayers 190 billion pounds ($207 billion) this fiscal year.
The news triggered the pound's biggest drop against the U.S. dollar since March 18, 2020, when then-Prime Minister Boris Johnson announced the first nationwide lockdown to control the spread of COVID-19.
The British currency closed at $1.0822 in London on Friday, from $1.1255 on Thursday.
Prime Minister Liz Truss, who took office less than three weeks ago, is racing to combat inflation at a nearly 40-year high of 9.9% and head off a prolonged recession. Facing a general election in two years, she needs to deliver results quickly.