The International Monetary Fund urged U.K. Prime Minister Liz Truss to “re-evaluate” her tax-cutting plan, saying it will “likely increase inequality” in a harsh statement released Tuesday evening.
The IMF is “closely monitoring” the situation in the U.K. after Chancellor Kwasi Kwarteng announced the mini-budget last Friday, which sparked the pound crashing to an all-time low against the dollar, and sent the cost of borrowing through the roof.
“Given elevated inflation pressures in many countries, including the U.K., we do not recommend large and untargeted fiscal packages at this juncture,” the statement reads.
Opposition Labour leader Keir Starmer also had stern words, during an appearance on Wednesday on LBC.
“The IMF statement is very serious, and it shows just what a mess the government have made of the economy. And it is self-inflicted,” he said.
Kwarteng said Monday he would lay out a “medium-term fiscal plan” on November 23. Starmer wasn’t impressed. “That’s far too long. They’ve got to review the plans they put out on Friday. They’ve got to do it urgently, in my view,” he said.
The IMF urged Kwarteng to “provide support that is more targeted and re-evaluate the tax measures” during his upcoming announcement.
Shortly after the IMF statement, credit ratings agency Moody’s released its own scathing take on the British plan, saying it could threaten the country’s credibility with lenders by creating larger budget deficits.