The IMF urges the UK to consider providing more targeted support to families and businesses rather than a substantial tax cut.
The International Monetary Fund (IMF) has taken aim at Britain’s new financial plans that have roiled markets, warning that “large and untargeted fiscal packages” will likely increase inequality in the region. UK and could undermine monetary policy.
In its first comment on Tuesday on plan of the new UK Finance Minister Kwasi KwartengThe IMF has urged authorities to consider more targeted support for families and businesses instead of substantial tax cuts and sharp increases in government spending.
“We are closely monitoring recent economic developments in the UK and are engaged with the authorities,” an IMF spokesman said, in response to a question from the firm. Reuters news after the pound hit an all-time low amid growing market concerns.
“Due to mounting inflationary pressures in many countries, including the UK, we do not recommend large and untargeted fiscal packages at this time, as it is important that fiscal policy is not acts as a cross-purpose for monetary policy,” an IMF spokesman said the first public reaction.
Kwarteng, who on Friday unveiled a budget that aims to grow the economy by cutting taxes and sharply increasing government borrowing, responded to the market turmoil by promising to roll out plans. mid-term debt reduction plan on November 23.
The global lender understands that the UK’s “major financing package” is intended to help people cope with higher energy prices and spur growth through tax cuts and supply measures, but the “nature” of UK measures will likely increase inequality,” the IMF said.
Kwarteng’s November 23 budget will provide “an early opportunity for the UK government to consider ways of providing more targeted support and to re-evaluate tax measures, particularly those that are more favorable to the UK economy.” for high earners,” added the spokesman.
The UK was forced to apply for a loan of nearly $4 billion to the IMF during the financial crisis of 1976, with IMF negotiators insisting on deep cuts in public spending at the time.
IMF officials have repeatedly warned in recent months about the need to carefully adjust fiscal and monetary policy when Central banks raise interest rates globally to control inflation.
