The International Monetary Fund (IMF) has reportedly upped its criticism of the UK Chancellor of the Exchequer, Kwasi Kwartengs mini-budget, just days after warning that it will substantially drive inflation.
The financial agency, which aims to stabilize global economic conditions, acknowledged that while Kwarteng's tax cuts would momentarily boost growth the reduction would complicate the fight against skyrocketing prices.
IMF anticipates that UK prices will remain high for a longer period, with Slovakia being the only country in the eurozone to experience higher inflation.
As per the financial institutions recent assessment of the global economy, inflation, which measures how the expense of living grows over time, is predicted to reach a peak in the UK before the end of the year at roughly 11.3%.
Although the IMF agreed that the governments mini-budget was meant to promote economic growth, it cautioned that over the next two years, the tax incentives would quicken the rate of price increases on average around 9%, considerably exceeding the Bank of Englands target of 2%.
Despite the fact that the UK economy is projected to grow the quickest among the large economies in the G7 group this year, it is predicted to increase by just 0.3% next year, coming to a virtual standstill.
Interestingly, the official spokesperson for the Prime Minister, Downing Street, backed the chancellor's proposals, stating that they aimed to help British citizens at a time of worldwide high costs and that the IMF report illustrated the global issues that countries are confronting.
The outlook for the UK national debt was likewise better than most of its G-7 counterparts prior to Kwarteng's USD 47 billion tax giveaway. According to the IMF, the UK's gross debt will only be 68% of GDP in 2027, close to Germany's 60% and at least 20% lower than that of any other G-7 country.
Source Credit: https://www.bbc.com/news/business-63206733