The recent chaos on the UK financial markets has generated waves of stress and selling by investors far beyond the UK.

As the sell-offs collide with high inflation, rising interest rates and the war in Ukraine, they have raised fears the turmoil in the UK could set off a wider crisis.

Many analysts have said they believe the fallout is likely to be limited, especially amid signs that the government is reconsidering some of its plans.

Chancellor Kwasi Kwarteng was sacked on Friday, and the government has dropped parts of the package of tax cuts that initially sparked the market turmoil.

But the episode has highlighted the financial risks of the current moment.

“Markets are fragile. We have seen vulnerability that’s been building over the last decade-plus,” Fabio Natalucci, a deputy director at the International Monetary Fund (IMF), said earlier this week, describing the UK episode as a “warning shot”.

“That fragility makes the financial risk much more elevated.”

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