The IMF has warned Britain that tax cuts could be damaging

Chancellor Kwarteng leaves No 11 to deliver his Growth Plan Credit: HM Treasury flickr

THE IMF has warned Britain that tax cuts could be damaging to the economy in an almost unprecedented criticism of the monetary policy of a G7 nation.

Some observers suggest that the tax cuts amounting to £45 announced by new Chancellor Kwasi Kwarteng as part of his Growth Plan on September 23 are more akin to a gambler placing all of their money on black in the hopes of winning.

As the Government reduces the amount of tax it will be able to collect and continues to promise aid during this time of worldwide economic crisis, the only solution will be to borrow even more money.

The actual statement from the International Monetary Fund which was issued on September 27 included the observation;

“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.”

The Chancellor reportedly chose not to take note of any advice from the Office for Budget Responsibility which is a non-departmental public body funded by the UK Treasury, that the UK government established to provide independent economic forecasts and independent analysis of the public finances.

It is expected that the Bank of England will urgently consider increasing bank rate yet again as both sterling and the FTSE share index tumbled and ratings agency Moody’s warned it may cut Britain’s credit rating.

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