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Tax & Spend

IMF Tells UK to Rethink Tax Cuts as Moody’s Says Rating at Risk

  • Fund not recommending large, unfocused spending packages now
  • Important fiscal and monetary policy work together, fund says
Bloomberg business news
WATCH: Allianz’s Mohamed El-Erian says the BOE must “be more aggressive” but that the UK is not facing an economic situation like 1976.Source: Bloomberg
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The International Monetary Fund urged the UK government to reconsider the massive unfunded tax cuts announced last week, while Moody’s Investors Service said the plan could do permanent damage to the public finances. 

The IMF said fiscal stimulus is inappropriate given the inflation pressures in the UK economy, and the package risks making life harder for the Bank of England. Moody’s forecast that it will lower economic growth -- contradicting the view from Chancellor of the Exchequer Kwasi Kwarteng -- by pushing up interest rates.