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IMF warns UK against tax cuts amid £30bn fiscal deficit concerns

IMF warns UK against tax cuts amid £30bn fiscal deficit concerns

Posted on May 24, 2024   |  

The IMF advised against Jeremy Hunt's proposed tax cuts before the election, citing a potential £30bn deficit in the UK's finances.

It labeled the government's current spending plans as unrealistic and warned of tough decisions ahead.

The IMF criticized last year's national insurance cuts and questioned the wisdom of further reductions before the election.

To manage rising debt, the Treasury may need to consider measures like expanding VAT, introducing road pricing, ending the state pension triple lock, and adding user fees for public services.

The UK economy is expected to recover smoothly with a quicker-than-anticipated drop in inflation and the end of last year's mild recession.

The IMF predicts 0.7% growth for the UK economy this year, up from the 0.5% forecasted in the previous month's World Economic Outlook.

With the Bank of England considering interest rate cuts from 5.25%, the IMF sees potential for two or three 0.25 percentage point reductions this year.



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