The IMF has launched a biting attack on the UK’s plan to implement ￡45bn of debt-funded tax cuts, urging the government to “re-evaluate” the plan and warning the “untargeted” package threatens to stoke soaring inflation.
The multilateral lender said it was “closely monitoring” developments in the UK and was “engaged with the authorities” after chancellor Kwasi Kwarteng unveiled the tax cuts last week, sparking a collapse in the value of sterling and a spike in the country’s borrowing costs.
“Given elevated inflation pressures in many countries, including the UK, we do not recommend large and untargeted fiscal packages at this juncture,” the IMF said in a statement. “It is important that fiscal policy does not work at cross purposes to monetary policy.”