Pound information at this time: IMF assertion hits out at Kwarteng’s tax cuts and urges UK to alter course
As the pound fell once further in Asian trading, Labour’s Sir Keir Starmer stated that the IMF’s warning over Liz Truss and Kwasi Kwarteng’s tax cuts for the wealthy is “extremely serious” and illustrates “what a mess the government has made of the economy.”
In a rare intervention, the IMF blasted the government, stating that “large and untargeted fiscal packages” would “likely increase inequality” in Britain. This came after the chancellor’s mini-Budget on Friday sent the pound, bonds, and gilt yields tumbling to record lows and drove up borrowing costs by driving up gilt yields.
A representative for the IMF stated, “Given the rising inflation pressures in many countries, including the UK, we do not suggest big and untargeted fiscal packages at this juncture, since it is crucial that fiscal policy do not act in conflict with monetary policy.”
In response, a Treasury spokesperson said: “We have acted at speed to protect households and businesses through this winter and the next, following the unprecedented energy price rise caused by [Russian president Vladimir] Putin’s illegal actions in Ukraine.”
Speaking to LBC as his party’s conference comes to an end today, the Labour leader said: “This is self-inflicted by the government. People are very, very worried this morning, their mortgages are going up. The government has got to respond to this.”
Claiming that “change” is in the air, after his widely well-received speech in Liverpool yesterday which saw him seek to reclaim Labour as “the party of the centre-ground”, Sir Keir warned that “we are going to inherit a real mess if and when we come into government”.
The global lender predicted that the UK’s new measures would likely increase inequality rather than achieving the government’s aim of creating a prosperous Britain.It is not just opposition parties that have condemned the new government’s actions.