Britain’s massive and unfunded tax cuts unveiled in a recent budget have led to a major loss of market confidence in the country’s ability to service its debt. The pound sank against the dollar Friday after Prime Minister Liz Truss sacked finance minister Kwasi Kwarteng. Sterling tumbled 1.2 percent to $1.1188 but this was comfortably above the record dollar-low close to parity it reached in the immediate aftermath of the budget last month. Yields on UK government bonds, or gilts, have meanwhile soared following the heavily-criticised tax and spend announcement by Kwarteng. The extent to which the storm could spread to other markets or even degenerate into a financial crisis is outlined below in questions put forward to economic experts. Surging yields on long-term UK government bonds triggered emergency buying of such debt by the Bank of England (BoE) to avoid a liquidity crisis — the result of too many sellers and not enough buyers. The intervention ends Friday and market watchers cannot be sure which direction assets will go in amid current volatility. Markets are fearful that the unfunded tax cuts could send state debt ballooning further, having soared in recent years on supporting the economy through the Covid pandemic. The government is not expected to provide details of how it will fund the tax cuts until October 31.