IMF criticizes UK tax cuts, urges reconsideration

The International Monetary Fund has joined a wide range of institutions worldwide criticizing the UK’s huge tax cuts in a plan that has exerted mega pressure on the pound which was plunging to a record low.

With this rare criticism of the UK’s large developed economy, the International Monetary Fund is warning that the tax cuts would likely increase inflation and inequality.

“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,” an IMF spokesperson said.

“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 spokesperson added.

The collapse in the pound since Friday has been accompanied by surge in UK borrowing costs, with yields on 5-year government bonds now topping those of much more heavily-indebted European economies such as Italy and Greece.