THE IMF’S extraordinary intervention following the Chancellor’s sweeping tax cuts is “concerning” and shows the “unmitigated disaster” created by the Tory government, opposition politicians have said.
The International Monetary Fund (IMF) rebuked the UK Government in the days following Kwasi Kwarteng’s mini-budget, which saw the pound fall to a record low against the dollar and banks hike interest rates.
The fiscal statement saw taxes cut for the highest earners, the cap on banker’s bonuses lifted and a cancellation of the planned rise in corporation tax.
The fallout has seen the Bank of England (BoE) take emergency action as the UK enters “crisis territory” and to avert a full-blown financial crisis has launched a temporary bond-buying programme.
Opposition politicians have blasted the latest intervention from the IMF, who called on Kwarteng to “re-evaluate the tax measures”, adding that they were “closely monitoring” the situation.
Speaking to the BBC on Wednesday, interim Finance Secretary John Swinney said: “I’m very concerned by what the International Monetary Fund has said overnight.
“I think the warnings are very stark about the folly of the decision that have been taken by the UK Government.
“I think the IMF’s criticism of the unfunded tax cuts which will simply increase the cost of borrowing – and we’re already seeing that with punishing increases in interest rates which will affect people who have mortgages around the country and some of that increase in mortgage rates will dwarf the small savings that will be made in the unfunded tax cuts that have been made.”
SNP Westminster leader Ian Blackford reiterated his demand for parliament to be recalled for the policies to be scrutinised. The House of Commons is currently in recess for the party conference season.
He added: "The Prime Minister and Chancellor must bring forward an emergency budget within days not weeks, and publish OBR forecasts, to undo the reckless damage they have inflicted and prevent this crisis spiralling further into catastrophe.
"The IMF intervention is utterly damning - and it underlines just how absurd and economically illiterate it is for Douglas Ross and the Scottish Tories to demand that the Scottish Government make the same mistakes as the UK Government.”
The Scottish Greens said that it wasn’t just the IMF who had issued stark warnings, adding that respected global ratings agency Moody’s, the US Treasury Department and a slew of other financial experts have indicated concern over the UK’s tax announcements and their subsequent immediate impacts on markets and interest rates.
Maggie Chapman, Green’s economy spokesperson, warned of an incoming disaster for households across Scotland.
She said: “The consequences on the financial markets and business sector are already clear as institutions react.
“But the impacts on ordinary people will become life changing, as people lose their homes through higher mortgage payments, are plunged into debt, struggle with fuel bills and weekly shopping, and potentially find their jobs at risk.
“This is becoming a living tragedy which if unchecked could scar generations to come. The UK Government has to put aside its pride and reconsider its reckless set of tax cuts before it’s too late.”
Scottish Greens finance spokesperson Ross Greer added: “The Tories have shown they either did not understand or did not care what the impacts of these cuts would be, but it's the public who will suffer from them in everything from public service cuts to rising mortgage costs.”
Meanwhile, Keir Starmer said the Government must “urgently review” its tax cuts and claimed the Tories have lost the right to ever claim to be the party of fiscal responsibility.
The Labour leader told BBC Radio 4’s Today programme that “self-inflicted” economic wounds have been inflicted on the economy, adding: “It’s the worst of all situations for our country to find itself in.
“Rather than coming on and disparaging the IMF, the Government needs to come on and urgently review the plans that it set out last Friday.
“The Conservative Party can never again claim to be a party of fiscal responsibility, they’ve lost the right to claim that after what they did last Friday.”
The LibDems demanded a recall of parliament. Wendy Chamberlain MP added: "Truss and Kwarteng have been in Government for three weeks, and the IMF has already been forced to issue a statement on their reckless economic policy.
"Both are totally blinded by ideology, which is making millions across the UK suffer.”
