Current:Home > MyBritain’s Conservative government warned against tax cuts by IMF economist-LoTradeCoin
Britain’s Conservative government warned against tax cuts by IMF economist
View Date:2024-12-24 10:46:12
LONDON (AP) — The International Monetary Fund’s chief economist has advised the U.K. government to avoid further tax cuts amid expectations Prime Minister Rishi Sunak’s battered administration will do just that to win over voters in an election year.
Instead of reducing taxes, the government should ensure it is prepared to meet increasing demands for spending on the National Health Service, social care and education as Britain faces sluggish economic growth and the lingering effects of high inflation, Pierre-Olivier Gourinchas told reporters after the IMF released its latest outlook for the world economy.
U.K. Treasury chief Jeremy Hunt is widely expected to cut taxes in the coming months as part of an effort to boost support for his Conservative Party, which trails badly in most opinion polls. The next general election must be held by Jan. 28, 2025, and is expected to take place this year.
But Gourinchas said cutting taxes would be a mistake. Britain needs to make sure its finances are strong enough to accommodate increased spending demands without increasing debt as a proportion of economic output, he said.
“In that context, we would advise against further discretionary tax cuts as envisioned and discussed now,” Gourinchas said.
His comments came after the IMF downgraded its outlook for the U.K. economy, forecasting growth of 0.6% this year and 1.6% in 2025. In October, the IMF forecast that the U.K.’s gross domestic product would grow 2% in 2025.
Hunt is focusing on longer-term projections, noting that the IMF expects growth to strengthen over the next few years.
“It is too early to know whether further reductions in tax will be affordable in the budget, but we continue to believe that smart tax reductions can make a big difference in boosting growth,” he said.
Concerns about responsible fiscal policies are especially sensitive for Sunak and Hunt as they came to power after their predecessors were widely criticized for announcing millions of pounds in tax cuts without saying how they would be paid for.
Former Prime Minister Liz Truss was forced to resign after less than two months in office when concern about her policies sent the pound tumbling to an all-time low against the U.S. dollar and forced the Bank of England to intervene in bond markets to protect pension funds.
veryGood! (23)
Related
- Bodyless head washes ashore on a South Florida beach
- This Jennifer Aniston Editing Error From a 2003 Friends Episode Will Have You Doing a Double Take
- It's nothing personal: On Wall Street, layoffs are a way of life
- Florida’s Majestic Manatees Are Starving to Death
- US wholesale inflation picks up slightly in sign that some price pressures remain elevated
- Attention, Wildcats: High School Musical: The Musical: The Series Is Ending After Season 4
- Wildfire Smoke: An Emerging Threat to West Coast Wines
- Markets are surging as fears about the economy fade. Why the optimists could be wrong
- After Baltimore mass shooting, neighborhood goes full year with no homicides
- We Need a Little More Conversation About Cailee Spaeny and Jacob Elordi in Priscilla First Trailer
Ranking
- Advocates Expect Maryland to Drive Climate Action When Trump Returns to Washington
- A Disillusioned ExxonMobil Engineer Quits to Take Action on Climate Change and Stop ‘Making the World Worse’
- Attention, Wildcats: High School Musical: The Musical: The Series Is Ending After Season 4
- As the Livestock Industry Touts Manure-to-Energy Projects, Environmentalists Cry ‘Greenwashing’
- Sister Wives’ Kody Brown Explains His Stance on His Daughter Gwendlyn Brown’s Sexuality
- ESPN's Dick Vitale says he has vocal cord cancer: I plan on winning this battle
- Increased Flooding and Droughts Linked to Climate Change Have Sent Crop Insurance Payouts Skyrocketing
- Get $115 Worth of MAC Cosmetics Products for Just $61 Before This Deal Disappears
Recommendation
-
Hurricane-stricken Tampa Bay Rays to play 2025 season at Yankees’ spring training field in Tampa
-
Can Rights of Nature Laws Make a Difference? In Ecuador, They Already Are
-
What’s On Interior’s To-Do List? A Full Plate of Public Lands Issues—and Trump Rollbacks—for Deb Haaland
-
Hundreds of ready-to-eat foods are recalled over possible listeria contamination
-
Threat closes Spokane City Hall and cancels council meeting in Washington state
-
FDA approves first over-the-counter birth control pill, Opill
-
Inside Clean Energy: Rooftop Solar Could Lose Big in Federal Regulatory Case
-
Maryland’s Capital City Joins a Long Line of Litigants Seeking Climate-Related Damages from the Fossil Fuel Industry