September 29, 2022
2 mins read

IMF blasts UK’s new fiscal plans

Earlier this month, the UK government also announced a series of measures to support households and businesses with their surging energy bills amid a worsening cost-of-living crisis….reports Asian Lite News

The International Monetary Fund (IMF) has openly questioned the UK’s new fiscal plans and called for more targeted support measures.

An IMF spokesperson called the fiscal measures, including the large-scale tax cuts, “untargeted” and said they will “likely increase inequality” given “elevated inflation pressures” in the UK, reports Xinhua news agency.

The IMF said that “it is important that fiscal policy does not work at cross purposes to monetary policy” and called on the UK government to “re-evaluate the tax measures, especially those that benefit high income earners”, on November 23, when Chancellor Kwasi Kwarteng is expected to make his next budget announcement.

The UK consumer price index rose by 9.9 per cent in the 12 months to August, as food and non-alcoholic beverage prices rose by 13.1 per cent.

To tackle high inflation, the Bank of England (BoE) has increased interest rates to 2.25 per cent, the highest since 2008.

In response, a UK Treasury spokesperson said Kwarteng will “publish his medium-term fiscal plan on November 23, which will set out further details on the government’s fiscal rules.”

The rebukes were part of drastic market reactions to the government’s new measures.

The plans, announced on September 23 by Kwarteng, include cancelling the planned increase in corporation tax to 25 per cent and keeping it at 19 per cent, and reversing this April’s 1.25 percentage point rise in National Insurance contributions.

He also announced a one percent cut to the basic rate of income tax to 19 per cent in April 2023, one year earlier than planned.

The 45 per cent additional rate of income tax on earnings above 150,000 British pounds ($163,000) will also be scrapped.

Kwarteng set a target of 2.5 per cent economic growth alongside these plans.

According to the Chancellor, the tax cuts and reforms, the biggest package in generations, “send a clear signal that growth is our priority”.

The 45-billion-pound tax cut is the biggest since 1972.

Earlier this month, the UK government also announced a series of measures to support households and businesses with their surging energy bills amid a worsening cost-of-living crisis.

However, since the announcement of the new measures, the sterling has fallen and the cost of government borrowing has soared.

On Monday, the pound tumbled to trade as low as $1.035, taking it closer to parity. The pound remained under pressure on Wednesday, trading against the dollar at $1.07.

ALSO READ: UK PM Liz Truss defends her mini-budget

Previous Story

Terror funding: Pakistan’s largest bank faces liability in US court

Next Story

Kremlin dismisses claims Russia attacked Nord Stream

Latest from -Top News

Piyush Goyal Heads to Doha for Trade Talks

During the visit, both sides are expected to discuss the proposed India–Qatar Free Trade Agreement (FTA)….reports Asian Lite News Union Commerce and Industry Minister Piyush Goyal will travel to Doha, Qatar, on

Jaishankar Hints at Tariff Deal with US

Jaishankar explained that the ongoing trade tensions largely stem from the inability of both sides to reach a common ground on several issues….reports Asian Lite News External Affairs Minister S. Jaishankar on

Rajnath Singh Heads to Australia for Key Defence Talks

The visit comes at a historic moment when India and Australia commemorate five years of establishment of India-Australia Comprehensive Strategic Partnership…reports Asian Lite News Defence Minister Rajnath Singh will visit Australia from

California Takes Trump to Court

Trump claimed that the deployment of federalized troops was necessary because the city of Portland was under siege…reports Asian Lite News California Governor Gavin Newsom said the state will sue the Trump

Hamas Heads to Egypt for Gaza Talks

The negotiation will focus on the details of enacting the first phase of the plan…reports Asian Lite News A delegation from the Palestinian group Hamas arrived in Egypt on Sunday ahead of
Go toTop

Don't Miss

Kremlin slams Britain over supply of depleted uranium weapons

Moscow has urged all international powers to halt all weapon

Sunak urges right-wing voters to stand by his party

Farage, one of Britain’s most recognizable and divisive politicians, has