The International Monetary Fund (IMF) has criticized Chancellor Kwasi Kwarteng for making “the job of monetary policymakers more difficult”. Mr Kwarteng came under fire from the International Monetary Fund earlier today after the organization said it was making the fight against inflation more difficult. In its World Economic Outlook, the IMF said: “The fiscal package should lift growth somewhat above near-term expectations, while making it more difficult to fight inflation.”
He added: “In the UK, the announcement in September of significant debt-financed fiscal easing, including tax cuts and measures to deal with high energy prices, was associated to a rise in gilt yields and a sharp depreciation of the currency which was then reversed.”
Hitting politics, the IMF report continued: “Without fiscal contraction elsewhere, and with tight supply, unfunded government spending increases or tax cuts will only push inflation further and make the job of policymakers monetary more difficult.”
More generally, the organization predicted that the next year would be difficult for many people.
He warned that the “worst” of the cost of living crisis is “yet to come”, saying next year will “look like a recession”.
The IMF criticism comes after the government announced a series of tax cuts as part of the mini-budget in September, including cutting the basic income tax rate from 20 to 19 percent and abolishing the maximum tax rate of 45%.
The planned increase in corporation tax, which was to increase from 19% to 25%, will also be abolished.
Meanwhile, stamp duty will be reduced for homebuyers.
In the wake of the announcement, the pound fell to a record low against the dollar. The following Monday, borrowing costs hit their highest level since August 2008.
The Bank of England was then forced to intervene in the face of “significant risk” to the UK economy, announcing it would start buying bonds to stabilize what it described as “dysfunctional markets”.
READ MORE: Kwasi Kwarteng issued growth plan warning as MPs plot rebellion
Earlier this week, Scottish First Minister Nicola Sturgeon said Liz Truss’s premiership had been “utterly disastrous” for the UK economy.
She told Sky News: “The decisions she made in her first few weeks as Prime Minister have been absolutely devastating for the economy and for the people across the country who are paying the price for her decisions by increasing mortgage rates and borrowing costs.
“She hasn’t had a hold on the government since she became prime minister.
“What has happened in the mortgage market is that pension funds are on the verge of collapse because of its lack of control.”
Responding to Ms Sturgeon’s comments, a UK Government spokesman said: “The Prime Minister has made it clear that the UK Government’s priority is to deliver economic growth across the Union and to work together on common issues, especially energy security.
“UK Government ministers, including the Minister for Intergovernmental Relations, as well as officials, continue to engage in regular dialogue with their devolved counterparts.”