IMF warns Britain against more pre-election tax cuts

The International Monetary Fund (IMF) cautioned the UK government against tax cuts ahead of an upcoming election, stressing the likelihood of future tax rises to address debt targets. While upgrading British economic growth for 2024 to 0.7%, the IMF criticized recent tax reductions, including lower social security contributions, implemented by Prime Minister Rishi Sunak's administration. The Fund recommended the Bank of England to lower interest rates two or three times in 2024 and suggested revenue-raising measures like increased carbon and road-usage taxes, broadening VAT and inheritance tax bases, and reforming capital gains and property taxes. It advised against additional tax cuts unless growth-enhancing and offset by deficit-reducing measures, noting weak investment and immigration constraints as headwinds to economic growth. Sunak and Finance Minister Jeremy Hunt plan further economic incentives post-summer to bolster support for the Conservative Party ahead of the anticipated election.