The International Monetary Fund has attacked the UK Conservative government’s tax plans, claiming that “large and untargeted fiscal packages” will be responsible for “increasing inequality”.
Here’s the IMF’s statement:
“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.”
It’s a huge slapdown for Liz Truss and her Chancellor, Kwasi Kwarteng – basically saying that the “fiscal event” of last Friday (September 23) was an ideologically-motivated “hit and hope” exercise with no factual support and no chance of success.
The call for re-evaluation in the November 23 budget is a clear warning to re-balance the economy in favour of the “families and businesses” Truss and Kwarteng claimed to be helping, rather than the “high income earners” they actually boosted.
There’s a lot of commentary on this – much of it focusing on the humiliation it signifies for Truss and Kwarteng. Here’s the balanced response from Labour’s Rachel Reeves:
The statement from the IMF this evening shows the seriousness of the situation our economy faces.
Government must urgently lay out how it will fix the problems it has created.
This is a statement that should set alarm bells ringing in government.
They need to act now.
— Rachel Reeves (@RachelReevesMP) September 27, 2022
Others were less equivocal:
The IMF has urged Liz Truss and Kwasi Kwarteng to reverse their cut on the top rate of income tax. That’s about as humiliating as it gets for a G7 government.
— Matthew Stadlen (@MatthewStadlen) September 28, 2022
And there has been a little speculation on how the Tories will react. This seemed on point when I first read it:
Have the Conservatives accused the IMF of being part of a left wing conspiracy yet?
— Bill Esterson (@Bill_Esterson) September 28, 2022
Then I found this, which tends to confirm it:
I note right wingers are now describing the IMF as a left wing, ‘woke’ organisation. And these are the sorts of people we now have in government
— Richard Murphy (@RichardJMurphy) September 28, 2022
The real question is whether either Truss or Kwarteng will remain in post long enough to deliver a budget that redresses the situation on November 23.
Take a look at these clips, that This Writer found yesterday, and draw your own conclusions:
Is the party over before it has even begun for these two? The number of ‘no confidence’ letters arriving at the office of Sir Graham Brady may indicate that it is.
Have YOU donated to my crowdfunding appeal, raising funds to fight false libel claims by TV celebrities who should know better? These court cases cost a lot of money so every penny will help ensure that wealth doesn’t beat justice.
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