IMF slams UK government tax plans, warns cost-of-living crisis may worsen

The International Monetary Fund has come hard against the British government over its tax cut plans. The IMF is an international organization that aims to stabilize the global economy. The IMF has warned that the measures like tax cuts can cause a cost-of-living crisis. While issuing a statement, the IMF stated that the measures would push the prices further up and increase inequality.

Notably, markets have also gone down the slope after the announcement of plans for tax cuts, causing a dip in the value of the pound. Besides, the sterling dropped by 0.7% to $1.06 after the IMF issued the statement. Sterling had hit a record low of $1.03 on September 26.

Earlier, the UK government had stated that the measure aimed to kick start economic growth. The government recently announced the £45-billion tax cut, the biggest tax package in the country in fifty years. The British government, through the recent proposals, will scrap the top rate of income tax and end a cap on bonuses of bankers. However, the move has fueled fears that the government's borrowing can soar along with interest rates.


The IMF said that although the plans for tax cuts aimed at boosting growth, they could worsen the already rising prices. The move may also increase inequality, IMF added.

Meanwhile, the former Brexit minister, Lord Frost, has rubbished the IMF's statement, calling it an advocate of "highly conventional economic policies."

FAQs

1). What does IMF stand for?
IMF stands for International Monetary Fund.

2). How much is the UK government's tax package?
The UK government has announced a tax package of £45 billion.