By Ben Zeisloft
The International Monetary Fund (IMF) cautioned the British government on Tuesday as officials moved to cut taxes and regulations, arguing that the agenda will worsen inflationary pressures.
British Prime Minister Liz Truss and fellow Conservative Party lawmakers recently canceled a rise in the corporate tax rate, cut the basic income tax rate to 19%, and launched discussions about special economic zones in multiple regions of the United Kingdom. The government also introduced a stimulus proposal to limit the annual cost of power for a typical household to £2,500 for the next two years in response to soaring energy prices — a policy that follows the Energy Bills Support Scheme, which will remove £400 from citizens’ power bills each month over the upcoming winter.
Investors concerned about the government’s ability to fund obligations jettisoned assets this week, leading to a sharp decline in exchange rates for the British pound. The Bank of England began purchasing government bonds from the market in an attempt to slow the fire sale.
A spokesperson from the IMF, an international financial institution charged with securing worldwide monetary stability, issued a rare rebuke against the British government. “We are closely monitoring recent economic developments in the UK and are engaged with the authorities,” the spokesperson asserted.