(AmericanProsperity.com) – There has been a recent warning put out to Jeremy Hunt from the International Monetary Fund saying that he should not cut taxes.
Updated forecasts show issues for the global economy; they said that these cuts might not even be possible without borrowing or post-election spending cuts. The IMF stated that the chancellor should be more focused on repairing public finances after taking hits to the economy post-pandemic and with the war in Ukraine.
The economy, globally, saw a shift as there were many different factors to take into account like inflation, the pandemic, and overall the rise in prices for many people across the globe.
“Preserving high-quality public services and undertaking critical public investments to boost growth and achieve the net zero targets, will imply higher spending needs over the medium term than are currently reflected in the government’s budget plans,” the IMF said,
They continued, “Accommodating these needs, while assuredly stabilizing the debt/GDP ratio, will already require generating additional high-quality fiscal savings, including on the tax side.”
Hunt rejected this and said that he would be continuing with tax cuts despite what the IMF said.
“The IMF expects growth to strengthen over the next few years, supported by our introduction of the biggest capital investment tax reliefs anywhere in the world, alongside national insurance cuts to improve work incentives,” said the chancellor.
He says that tax reductions might not be affordable in the budget but that it’s too early to know, but that smart tax reductions can make a “big difference in boosting growth.” Pierre-Olivier Gourinchas, the IMF’s economic counselor said, “The clouds are beginning to part. The global economy begins the final descent toward a soft landing, with inflation declining steadily and growth holding up.”
The IMF did say that there was potential for things to get better but that the risks are still there and they should proceed with caution as they consider these tax reductions and the effects that they could have.
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