The International Monetary Fund (IMF) issued a statement on Tuesday in which it said it was “closely monitoring” the economic situation in the United Kingdom after the new British government led by Liz Truss presented measures to stimulate the economy. Currency crisis and substantial increase in the country’s fiscal costs.
“We are closely monitoring recent economic developments in the UK and are in touch with the authorities,” the IMF said in a statement on Tuesday.
“Given the high inflationary pressures in many countries, including the UK, we do not recommend large, unspecified tax packages at this time, as it is important that fiscal policy operates uncoordinated with monetary policy.”.
The IMF stressed that “the nature of the UK measures will increase inequality” as the mini-budget presented by Finance Minister Kwasi Kwarteng last Friday included the removal of income tax ceilings and caps on bonuses for banking professionals.
Therefore, the “November 23 Budget” – the UK’s main budget document with financial guidelines for the coming year – “will provide an early opportunity for the UK Government to look at ways to provide more targeted support and reassess funding measures, particularly to benefit high earners”.
Pound sterling has already lost more than 20% against the dollar in the past twelve months – on September 28 last year, a pound was close to $1.35.
Since the program’s launch last Friday, it has seen a sharp devaluation, hitting an all-time high of $1.03 early Monday morning. On Wednesday morning, it was quoted at $1.06.
Kwasi Kwarteng used a regular meeting to reassure City of London finance chiefs about British financial stability and confirmed he was optimistic: “I believe that coming in close cooperation with our growth plan and medium-term financial plan. The Bank of England – our approach will work.
United Kingdom’s budget developments are being monitored by the US, US Treasury Secretary Janet Yellen So say the Financial Times Who is monitoring the situation?
Without commenting on the mini-budget, he said markets were “doing well” and that the UK’s problems had not spread to the rest of the world.
The UK’s inflation rate has fallen to 9.9% since 1982 as fuel prices fall on world markets, but is expected to rise to 11% before beginning a downward trajectory in October, according to Bank of England forecasts.
The central bank intends to continue raising interest rates to curb inflation, with the most significant increase in the policy rate, currently at 2.25%, expected at the next monetary policy decision, already scheduled for November 3 – an emergency hike not justified, despite the pound sterling touching $1.03, the bank said. A possibility ruled out on Monday is an all-time low.
Henry Blackwell is a contributor at Mediarunsearch.co.uk, covering a wide range of topics including news, politics, business, technology, sport, entertainment, and lifestyle. He focuses on delivering clear, balanced reporting and useful information that helps readers stay informed about current events and emerging developments. His work highlights stories that matter to everyday audiences, with an emphasis on accuracy, relevance, and accessible journalism.