The International Monetary Fund openly criticised Britain’s new economic strategy and called for the Chancellor to reverse the tax cuts announced on Friday
The IMF said the proposals would likely increase inequality and it questioned the wisdom of such policies.
“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,” an IMF spokesperson said.
“We are closely monitoring recent economic developments in the UK and are engaged with the authorities,” the spokesperson said.
Shadow Chancellor Rachel Reeves said the IMF intervention “shows the seriousness of the situation” and insisted the government must set out “how it will fix the problems it created through its reckless decisions to waste money in an untargeted cut in the top rate of tax.”
Earlier in the day U.S. economist Larry Summers, a former U.S. Treasury Secretary, said rocketing interest rates on long-dated British debt were a sign that credibility had been lost
Meanwhile officials at the Bank of England have indicated that interest rate rises are on the way
Chief Economist Huw Pill said it was likely to deliver a “significant policy response” to last week’s announcement of sweeping tax cuts
