UK's Economic Crisis: IMF Asks PM Truss To Reverse Rate Cuts

by Swarajya Staff - Sep 29, 2022 04:00 PM +05:30 IST
UK's Economic Crisis: IMF Asks PM Truss To Reverse Rate CutsUK's economic crisis

The IMF, in an unprecedented attack, has urged Lizz Truss to reverse her top rate tax cuts.

This is an extremely unusual attack by the IMF on the economic policy of a G7 nation.

The IMF has urged the Chancellor to the Exchequer, Kwasi Kwarteng to change course in November by using his fiscal plan.

A spokesman for the IMF said that Mr Kwarteng's announcement in November would “present an early opportunity for the UK government to consider ways to provide support that is more targeted and reevaluate the tax measures, especially those that benefit high income earners.”

The IMF added that it is “closely monitoring recent economic developments in the UK and are engaged with the authorities" and warned that the fiscal stimulus risks undermining the Bank of England’s efforts to curb inflation.

In just a few weeks since taking over as Prime Minster, Lizz Truss' government's decisions have led to UK's economy witnessing significant ruin.

Polls indicate that Sir Keri Starmer's Labour Party is in more advantageous position than ever to win the next British general election.

Rishi Sunak, whose warnings during his debate with Truss were labelled 'project fear', is avoiding saying 'I told you so' but people on British social media, including Labour supporters are stating, "well, he did warn us."

During the debates, Sunak was criticised for opposing tax cuts to the rich.

Sunak had said that we have tried cutting taxes, hoping it'll grow the economy but the evidence shows it hasn't grown the economy because businesses don't use it to invest but just for stock buy backs.

According to reports in British news papers and news channels, some senior Tory MPs are saying that "Kwasi and Liz will have to go. They have to, they are actually crashing the economy." 

After recently holding a no-confidence vote against Boris, it isn't clear if the 1922 committee will actually go ahead with outing Truss so soon. The general election isn't that far away.

Some Tory MPs have said that even if the party holds a no-confidence vote against Truss and ousts her, the party will still loose the next election to the Labour Party. Moreover, the Tory membership no longer has the stamina for another leadership contest.

"The government has lost control of the economy. It’s going to mean higher mortgages and higher prices. And what for? Unfunded tax cuts for the one per cent. They must recall parliament today and abandon this act of economic self-harm," said Labour's leader Sir Keir Starmer.

"Tory casino economics is gambling the mortgages and finances of every family in the country," he added.

Starmer is demanding the recall of Parliament to address the economic crisis. He is calling on government to abandon policies of the mini-budget, saying: "I think many people will now be extremely worried about their mortgage, about prices going up, and now about their pensions."

According to Lucy Fisher, Times of London's chief political commentator, a Tory MP said that the economic turmoil is striking.

"Politically this is extinction level for us. It's all over. Half of my colleagues realise it, the question is just how quickly will the other half catch up," said the MP.

The MP predicted that the Tory party's 1922 committee may have to get into action again and remove Truss, but added that it is doubtful that it will save the party in the next elections.

Bank of England has launched a temporary UK government bond-buying programme in an emergency move to stave off a “material risk to UK financial stability.”

"In the words of Norman Lamont on Black Wednesday: “today has been a very difficult day”. These are not circumstances beyond the control of Govt/Treasury . They were authored there. This inept madness cannot go on," said Simon Hoare, who is a member of parliament of the Tory party.

As the media is now reporting how prescient his assessment was, his absence from the public gaze is becoming more and more noticeable.

Rishi Sunak has refused to address the media and now it is being reported that he will not be attending the Conservative party conference either. He'll be in his home in Yorkshire.

An ally of his said that he wants to give Lizz Truss all the space she needs to 'own the moment'. Veteran journalist Andrew Marr said with a smile, "I believe this is what the young people call gas lighting".

Also Read: Italy Votes Decisively For Right Wing Giorgia Meloni, The Nation's 1st Female Prime Minister

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