The “anti-growth coalition”, as it was named by Liz Truss during her brief premiership, just keeps on growing. The latest to sign up is the International Monetary Fund (IMF), which has this week warned Rishi Sunak off cutting taxes and suggests instead a boost to public spending. It is a timely intervention. For the past few months, the right of the increasingly rightwing Tory party, including Ms Truss, has clamoured for lower taxes – supposedly in the name of economic growth, but more likely in the desperate hope of electoral survival. Mr Sunak has made it clear that he will indulge them, promising “more to come” on tax cuts. January began with a slice taken off national insurance contributions, and the debate around the March budget is not whether taxes will be cut but which ones are for the chop. Now along comes the IMF to wag an admonishing finger – and every British prime minister from Jim Callaghan onwards knows you don’t want one of those.
Just because the IMF says something, it ain’t necessarily so. In 2011 John Lipsky, then its acting managing director, flew to London to support George Osborne’s austerity plans. Two years later, its boss, Christine Lagarde, pulled a swift U-turn, and warned that spending cuts were tanking the economy. The very next year, in 2014, she U-turned again, claiming the UK was doing well. The reality is that ever since Britain’s bubble economy went pop in 2008’s crash, growth has been utterly anaemic. The financial crisis that the IMF did not spot produced a badly ailing economy, which the IMF signed off as being in good health. This in turn bred a crisis of cynical, extractive politics, at which IMF officials are doubtless appalled.
