By IMF ‘closely monitoring’ UK government tax cut plans following open criticism
The International Monetary Fund has openly criticised the UK government over its tax cuts plans.
The IMF has given a stark warning, considered to be unusual for a G7 nation, that the proposed measures are likely to ‘fuel the cost-of-living crisis’.
The BBC reported the IMF said the proposal was likely to ‘increase inequality and add to pressures pushing up prices’.
The pound fell against the dollar earlier this week, however, following the IMF’s warning, the pound has decreased yet again. The government assured the measures will ‘kickstart economic growth.’
The International Monetary Fund should assess the government’s whole economic strategy, not just measures announced in Friday’s mini-budget, a senior Conservative MP and ally of Liz Truss has said, the BBC also reported.
“This government has only just assumed its responsibilities with this new team of ministers,” Sir John Redwood tells Radio 4’s Today programme.
“We haven’t yet seen the whole policy. We need to see what the overall budgets look like, looking at the spending side as well as the revenue side.”
He adds that the IMF’s comments reflect “the errors of the past”.
“They didn’t foresee the big inflation which they triggered, they didn’t have sensible advice in good time to see off inflation, and now late in the day when the inflation is very visible for all to see, they’re suggesting taking measures to tackle it when the world has moved on.”
The IMF (Source:BBC) statement in full said:
“We are closely monitoring recent economic developments in the UK and are engaged with the authorities.
“We understand that the sizable fiscal package announced aims at helping families and businesses deal with the energy shock and at boosting growth via tax cuts and supply measures.
“However, given elevated inflation pressures in many countries, including the UK, we do not recommend large and untargeted fiscal packages at this juncture, as it is important that fiscal policy does not work at cross purposes to monetary policy.
“Furthermore, the nature of the UK measures will likely increase inequality.
“The November 23 budget will present an early opportunity for the UK government to consider ways to provide support that is more targeted and re-evaluate the tax measures, especially those that benefit high-income earners.”
