London Daily

Focus on the big picture.
Monday, Jun 02, 2025

IMF warns UK against mini-budget that will 'likely increase inequality'

IMF warns UK against mini-budget that will 'likely increase inequality'

The IMF also recommended against fiscal policies not targeted towards specific groups, saying that the plans as they are will benefit the rich rather than those who really need help.

The International Monetary Fund (IMF) has criticised the UK government's mini-budget, saying the plans for tax cuts and spending will increase inequality and counteract the Bank of England's monetary policy.

The conflicting government and currency policies, of seeking to ramp up growth via tax cuts and rein in inflation through interest rate rises, attracted sharp comment from the global financial institution on Tuesday.

"It is important that fiscal policy does not work at cross purposes to monetary policy," a spokesperson said.

The IMF - which saw its concerns echoed by a former Bank of England deputy governor - also recommended against fiscal policies not targeted towards specific groups.

"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," the spokesperson added.

The organisation was unequivocal: "The nature of the UK measures will likely increase inequality."

'Consider more targeted support'


It is the latest in mounting criticism of the government's decision to fund the biggest tax cuts in 50 years by borrowing money.

The announcement sent the pound to an all-time low, making importing goods more expensive, and saw government borrowing costs increase as gilt yields rose.

The IMF called on the government to consider more targeted support to families and business.

Chancellor Kwasi Kwarteng's 23 November fiscal plan, to be announced along with Office of Budget Responsibility forecasts, would be an appropriate occasion to do so, the IMF said.

It would provide an "early opportunity for the UK government to consider ways to provide support that is more targeted and re-evaluate the tax measures, especially those that benefit high-income earners".

The situation is being watched, the IMF warned, adding: "We are closely monitoring recent economic developments in the UK and are engaged with the authorities."

The IMF has had to intervene in UK affairs in the past.

In 1976, Britain had to apply for an IMF loan of nearly $4bn during a financial crisis. At the time, IMF negotiators insisted on deep cuts in public expenditure.

Newsletter

Related Articles

0:00
0:00
Close
Ukraine Executes Long-Range Drone Strikes on Russian Airbases
Conservative Karol Nawrocki wins Poland’s presidential election
Study Identifies Potential Radicalization Risk Among Over One Million Muslims in Germany
Good news: Annalena Baerbock Elected President of the UN General Assembly
Apple Appeals EU Law Over User Data Sharing Requirements
South Africa: "First Black Bank" Collapses after Being Looted by Owners
Poland will now withdraw from the EU migration pact after pro-Trump nationalist wins Election
"That's Disgusting, Don’t Say It Again": The Trump Joke That Made the President Boil
Trump Cancels NASA Nominee Over Democratic Donations
Paris Saint-Germain's Greatest Triumph Is Football’s Lowest Point
OnlyFans for Sale: From Lockdown Lifeline to Eight-Billion-Dollar Empire
Mayor’s Security Officer Implicated | Shocking New Details Emerge in NYC Kidnapping Case
Hegseth Warns of Potential Chinese Military Action Against Taiwan
OPEC+ Agrees to Increase Oil Output for Third Consecutive Month
Jamie Dimon Warns U.S. Bond Market Faces Pressure from Rising Debt
Turkey Detains Istanbul Officials Amid Anti-Corruption Crackdown
Taylor Swift Gains Ownership of Her First Six Albums
Bangkok Ranked World's Top City for Remote Work in 2025
Satirical Sketch Sparks Political Spouse Feud in South Korea
Indonesia Quarry Collapse Leaves Multiple Dead and Missing
South Korean Election Video Pulled Amid Misogyny Outcry
Asian Economies Shift Away from US Dollar Amid Trade Tensions
Netflix Investigates Allegations of On-Set Mistreatment in K-Drama Production
US Defence Chief Reaffirms Strong Ties with Singapore Amid Regional Tensions
Vietnam Faces Strategic Dilemma Over China's Mekong River Projects
Malaysia's First AI Preacher Sparks Debate on Islamic Principles
White House Press Secretary Criticizes Harvard Funding, Advocates for Vocational Training
France to Implement Nationwide Smoking Ban in Outdoor Spaces Frequented by Children
Meta and Anduril Collaborate on AI-Driven Military Augmented Reality Systems
Russia's Fossil Fuel Revenues Approach €900 Billion Since Ukraine Invasion
U.S. Justice Department Reduces American Bar Association's Role in Judicial Nominations
U.S. Department of Energy Unveils 'Doudna' Supercomputer to Advance AI Research
U.S. SEC Dismisses Lawsuit Against Binance Amid Regulatory Shift
Alcohol Industry Faces Increased Scrutiny Amid Health Concerns
Italy Faces Population Decline Amid Youth Emigration
U.S. Goods Imports Plunge Nearly 20% Amid Tariff Disruptions
OpenAI Faces Competition from Cheaper AI Rivals
Foreign Tax Provision in U.S. Budget Bill Alarms Investors
Trump Accuses China of Violating Trade Agreement
Gerry Adams Wins Libel Case Against BBC
Russia Accuses Serbia of Supplying Arms to Ukraine
EU Central Bank Pushes to Replace US Dollar with Euro as World’s Main Currency
Chinese Woman Dies After Being Forced to Visit Bank Despite Critical Illness
President Trump Grants Full Pardons to Reality TV Stars Todd and Julie Chrisley
Texas Enacts App Store Accountability Act Mandating Age Verification
U.S. Health Secretary Ends Select COVID-19 Vaccine Recommendations
Vatican Calls for Sustainable Tourism in 2025 Message
Trump Warns Putin Is 'Playing with Fire' Amid Escalating Ukraine Conflict
India and Pakistan Engage Trump-Linked Lobbyists to Influence U.S. Policy
U.S. Halts New Student Visa Interviews Amid Enhanced Security Measures
×