Former Minister of Finance Lawrence H Sommer has expressed his delight at it IMF urging the UK to reassess its unprecedented tax cuts.
What happened: Summers told a Financial Times on Tuesday article which reported on the IMF’s recommendation against large and untargeted fiscal packages amid heightened inflationary pressures in many countries including the UK
“I’m glad to see the IMF acknowledging the seriousness of the UK situation. While I agree with the fund’s judgment on the inequality of the tax cuts, the only thing that justifies their involvement is macroeconomic imprudence,” Summers tweeted.
I am pleased to see that the IMF recognizes the seriousness of the UK situation. While I agree with the fund’s judgment on the inequality of the tax cuts, the only thing that justifies their involvement is macroeconomic imprudence.
https://t.co/cutg2n6Diu— Lawrence H Summers (@LHSummers) September 28, 2022
Last week the British Chancellor of the Exchequer Kwasi Kwarteng Reduce income tax and stamp duty on home purchases and scrap a proposed increase in business taxes.
Why it matters: Summers stated that a financial crisis in the UK will affect London’s viability as a global financial centre. “So there is a risk of a vicious circle where volatility hurts fundamentals, which in turn increases volatility,” he tweeted.
For inflation: Summers also questioned the central bank’s stance on inflation, saying the proposals appear to have come from the Bank of England that there is something anti-inflationary about unlimited energy subsidies is bizarre. “Subsidies affect whether energy is paid for directly or through taxes, now and in the future, not its ultimate cost,” Summers said.
price action: That Invesco CurrencyShares British Pound Sterling Trust FXB has lost over 8% in one month.
