IMF Warns of Looming Global Recession

The pound suffered further falls on Wednesday after the UK Government was heavily criticised by the International Monetary Fund over its handling of economic policy.

Sterling fell back to 1.06 US dollars after reaching 1.08 US dollars on Tuesday.

The pound plunged to its all-time low against the dollar on Monday – at 1.03 – and there are fears it could head towards parity with the greenback unless the UK Government can ease financial market fears over its plans to slash taxes.

In a statement, an IMF spokesperson said: "We are closely monitoring recent economic developments in the UK and are engaged with authorities.We understand 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.

“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.

“Furthermore, the nature of the UK measures will likely increase inequality. The November 23 budget will present an early opportunity for the UK government to consider ways to provide support that is more targeted and reevaluate the tax measures, especially those that benefit high-income earners.”

In response to criticism from the International Monetary Fund, a Treasury spokeswoman 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 (Vladimir) Putin’s illegal actions in Ukraine.

“Our Energy Price Guarantee saves households £1,000 on average and we’re halving business energy bills through the Energy Bill Relief Scheme.

“We are focused on growing the economy to raise living standards for everyone and the Chancellor has announced he will publish his medium-term fiscal plan on November 23 which will set out further details on the Government’s fiscal rules, including ensuring that debt falls as a share of GDP (gross domestic product) in the medium term.”

It's a remarkable rebuke and further egg on the face for the UK government off the back of their heavily scrutinised mini-budget that was announced by Kwasi Kwarteng on Friday.

Yet in a bizarre twist, people, mostly Brexiteers and Tories are lashing out at the IMF's comments oddly branding them 'left-wing.' There have also been columns written claiming that the markets are scared of Labour's Keir Starmer.

All in all its just another normal day in the United Kingdom...

Have your say in our news democracy. Click the upvote icon at the top of the page to help raise this article through the indy100 rankings.

Please log in or register to upvote this article
The Conversation (0)