IMF Says Britain Does Not Need to Speed Up Fiscal Consolidation Ahead of October 28 Budget
The International Monetary Fund is not recommending that Britain speed up its fiscal consolidation to reduce its budget deficit faster, IMF fiscal affairs director Rodrigo Valdes said during the IMF-World Bank meetings in Bangkok on Wednesday, Reuters reported. "Our recommendation is 'stay the course'. We are not saying 'accelerate the pace of consolidation',"Valdes said, drawing a contrast with other big economies that have little or no plans to reduce borrowing at a time of rising interest rates. IMF Managing Director Kristalina Georgieva told a press conference: "The UK is actually one country where action to reduce the deficit has been taken decisively," while acknowledging that markets showed "a bit more sensitivity" to British government borrowing.
The British government ran a budget deficit of 4.4 percent of GDP last year and aims to balance day-to-day non-investment spending with tax revenue by the 2029/30 financial year, though previous governments regularly failed to meet similar goals. Despite lower debt levels than most of the largest advanced economies, British government borrowing costs last week touched their highest since 1998 as part of a global bond selloff. British tax revenue as a share of GDP is close to its highest since just after World War Two.
Finance minister John Healey, who arrived at the IMF meetings on Wednesday, will deliver his first annual budget on October 28. He faces extra spending demands from higher debt interest costs and pressures to spend more on defence and energy subsidies, as well as rising welfare costs. Asked if Britain should raise taxes or cut other areas of spending to fund defence, Valdes said many European countries faced similar challenges, and that the discussion about the social contract behind spending is "very, very urgent."
Source: GSM · USA (original Chinese edition)
Photo: 国际货币基金组织总部大楼。图片来源：Wikimedia Commons，International Monetary Fund 摄，公共领域
