Jeremy Hunt warned not to cut taxes in bombshell intervention before Budget
Tory Chancellor Jeremy Hunt has been warned of the danger of tax cuts any time soon by a top global body.
The International Monetary Fund said cuts now would mean less money for spending on vital services such as the NHS. The bombshell intervention comes ahead of the March Budget and a general election expected later this year.
In a double blow to the Tories, the IMF also downgraded its growth forecasts for the UK economy. The IMF brings together 190 member countries to try to stabilise the global economy.
IMF chief economist Pierre-Olivier Gourinchas said of the UK Government: “We would rather they not do this type of tax cuts.” He said ministers “might think of spending on healthcare and modernising the NHS; spending on social care; on education; you might think about critical public investment to address the climate transition; but also to boost growth.”
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Mr Hunt cut national insurance in the last autumn statement, a move the Office for Budget Responsibility thinks will cost the Treasury around £9.76billion in the 2028 tax year. But ahead of an election, Mr Hunt appears keen to cut taxes even further if he can.
Economists say the fact the Government borrowed less than expected in December might give the Chancellor the cover he needs to slash taxes further in the Budget on March 6.
Yet December’s figures from the Office for National Statistics showed debt levels are higher than they have been since the 1960s when compared with the size of the economy. Mr Hunt said yesterday: “It is too early to know whether further reductions in tax will be affordable in the Budget, but we continue to believe that smart tax reductions can make a big difference in boosting growth.”
Mr Gourinchas’s warning came after the IMF downgraded the UK growth this year to 0.6%, and 1.6% next. It would make the economy the second-worst performer in the G7 this year and the joint third-worst performer in 2025.
Labour’s Shadow chief secretary Darren Jones said: “This is yet more evidence of 14 years of Conservative economic failure. The Tories have left Britain with high debt, flatlining growth, high taxes and working people worse off.
“It’s time for change. We need an election now to give the British public the chance to vote for a changed Labour Party that will change Britain for the better.”
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