IMF warns UK against mini-budget that will ‘likely increase inequality’

Published

2 years ago

September 28, 2022

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The International Monetary Fund (IMF) has criticised the UK government’s mini-budget, saying the plans for tax cuts and spending will increase inequality and counteract the Bank of England’s monetary policy.

The conflicting government and currency policies, of seeking to ramp up growth via tax cuts and rein in inflation through interest rate rises, attracted sharp comment from the global financial institution on Tuesday.

“It is important that fiscal policy does not work at cross purposes to monetary policy,” a spokesperson said.

UK policy condemned as ‘utterly irresponsible’ – pound latest

The IMF – which saw its concerns echoed by a former Bank of England deputy governor – also recommended against fiscal policies not targeted towards specific groups.

“Given elevated inflation pressures in many countries, including the UK, we do not recommend large and untargeted fiscal packages at this juncture, as it is important that fiscal policy does not work at cross purposes to monetary policy,” the spokesperson added.

The organisation was unequivocal: “The nature of the UK measures will likely increase inequality.”

‘Consider more targeted support’

It is the latest in mounting criticism of the government’s decision to fund the biggest tax cuts in 50 years by borrowing money.

The announcement sent the pound to an all-time low, making importing goods more expensive, and saw government borrowing costs increase as gilt yields rose.

The IMF called on the government to consider more targeted support to families and business.

Chancellor Kwasi Kwarteng’s 23 November fiscal plan, to be announced along with Office of Budget Responsibility forecasts, would be an appropriate occasion to do so, the IMF said.

It would provide an “early opportunity for the UK government to consider ways to provide support that is more targeted and re-evaluate the tax measures, especially those that benefit high-income earners”.

The situation is being watched, the IMF warned, adding: “We are closely monitoring recent economic developments in the UK and are engaged with the authorities.”

The IMF has had to intervene in UK affairs in the past.

In 1976, Britain had to apply for an IMF loan of nearly $4bn during a financial crisis. At the time, IMF negotiators insisted on deep cuts in public expenditure.

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Health warning issued as heatwave grips South and Southeast Asia

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1 hour ago

May 4, 2024

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Health warning issued as heatwave grips South and Southeast Asia

Countries in South and Southeast Asia have been coping with a weeks-long heatwave which has seen record temperatures sweep parts of the region.

Pupils in the Philippines, India and Bangladesh have been told to stay at home and learn remotely due to a severe health risk.

Schools in Cambodia have also cut back on their hours.

Cambodia faces its hottest temperature in 170 years, according to meteorologists – as high as 43C (109F).

Bangkok in Thailand has reached 40C (104 F), but the heat index is said to have topped 50 C (122 F) due to the heat being trapped among the mass of buildings.

The United Nations Children’s Fund warned in April that the heat could put the lives of millions of children at risk and asked people who care for them to take extra precautions.

A spokesperson for UNICEF said around 243 million children were exposed to hotter and longer heatwaves.

They said the increased heat was “putting them at risk of a multitude of heat-related illnesses, and even death”.

Thirty people in Thailand have died from heatstroke in the past month, according to data from the country’s health ministry.

People are being advised to avoid outdoor activities and to stay hydrated.

Several towns in Myanmar were included on lists of the hottest spots globally last month, with temperatures reaching 48.2C (118F) in at least one case.

Parts of eastern India also experienced their hottest April on record.

Kerala, on India’s west coast, this week instructed all schools and colleges to close until Monday, while influencers in Bangladesh have encouraging people to plant trees in response to the record heat.

Benjamin Horton, director of the Earth Observatory of Singapore, said there were three factors for heatwaves: a naturally-occurring climate phenomenon known as El Nino, an increase in global temperatures, and human-induced climate change.

Brazil is currently experiencing another climate phenomenon – La Nina – with 39 dead and 68 missing in floods across the country.

More than 24,000 people have been forced to leave their homes due to the flooding.

Scientists believe the naturally-occurring phenomenon has intensified due to the impact of climate change.

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Philippine coastguard hits out at China’s ‘brute force’ after water cannon attack

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9 hours ago

May 4, 2024

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Philippine coastguard hits out at China's 'brute force' after water cannon attack

China has been branded “a bully” and an international lawbreaker after its ships blasted Philippine vessels with water cannon in the South China Sea.

Sky News was on board the BRP Bagacay when a Chinese vessel fired water at it, causing significant damage.

Philippine coastguard spokesman Jay Tarriela told Sky News that this week’s confrontation was the first time China had used “such aggression” against their ships.

“The metal parts and the railing were bent. The canopy was also destroyed. So this came as a surprise for us that China never hesitated to use brute force,” he said.

“It completely justifies us calling The People’s Republic of China a bully country.”

The Philippine coastguard was on a resupply mission to the Scarborough Shoal to deliver food and fuel to Philippine fishermen when they were struck.

The submerged reef lies in disputed waters. China claims sovereignty over the reef but it is much closer to the Philippines and lies within its legally recognised exclusive economic zone.

The vessel Sky News was on board was the closest the coastguard had ever been to the shoal – just 600 metres away from it.

Asked if the mission to the shoal was a provocative move by the Philippine coastguard, Commodore Tarriela denied they were “poking the bear” but rather “driving the bear out of our own territory”.

The Philippines has been stepping up its patrols in the area under the instruction of President Bongbong Marcos, and reasserting its claim to the shoal in recent months.

It has raised the spectre of open conflict. While neither side currently wants that, there is now a greater threat of open conflict.

Asked what the end game was for the Philippines, Commodore Tarriela said their priority was to “tell the world” about China’s aggression.

He said their secondary goal was to ensure “like-minded states” also made China “fall in line and respect international law”.

“Otherwise, it’s everybody’s loss,” he added.

Philippine government policy is not to resist using water cannon against Chinese vessels – and Commodore Tarriela insisted that policy remains in place after the confrontation.

The government also remains intensely determined to protect the waters it believes it has every right to operate in.

“We’re not going to yield and we’re not going to surrender a square inch of our territory,” Commodore Tarriela insisted.

Beijing has called the action its own coastguard took as “necessary”.

Speaking at the Chinese foreign ministry’s daily news conference, spokesperson Lin Jian described the coastguard’s conduct as “professional, proper, and lawful”.

World

Three charged over killing of Sikh separatist leader in Canada – in incident which sparked diplomatic spat with India

Published

13 hours ago

May 4, 2024

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Three charged over killing of Sikh separatist leader in Canada - in incident which sparked diplomatic spat with India

Three suspects have been charged by Canadian police over the killing of a Sikh separatist leader in Vancouver last June, in an incident that sparked a diplomatic spat between Ottawa and New Delhi.

Hardeep Singh Nijjar, 45, was shot dead outside a temple by masked gunmen in Surrey, outside Vancouver, on 18 June 2023.

Royal Canadian Mounted Police assistant commissioner David Teboul said police could not comment on the nature of the evidence or the motive.

“This matter is very much under active investigation,” Teboul said.

The three suspects – Indian nationals Kamalpreet Singh, Karan Brar and Karampreet Singh – were arrested in Edmonton, Alberta, the Royal Canadian Mounted Police said.

Superintendent Mandeep Mooker said: “This investigation does not end here. We are aware that others may have played a role in this homicide and we remain dedicated to finding and arresting each one of these individuals.”

Canadian Prime Minister Justin Trudeau sparked a diplomatic feud with India when he said in September that there were “credible allegations” of Indian involvement in the killing. India angrily denied involvement.

Mr Nijjar, an Indian-born citizen of Canada, was a leader in what remains of the Khalistan movement – a once-strong group calling for the creation of an independent Sikh homeland.

He was organising an unofficial referendum in India for an independent Sikh nation at the time of this death and had denied allegations of ties to terrorism.

The Khalistan movement has lost much of its power but is still supported by some in the Punjab state in northwestern India and in the Sikh diaspora overseas.

A violent, decade-long Sikh insurgency shook north India in the 1970s and 1980s, and was ultimately crushed in a government crackdown which saw thousands of people killed, including prominent Sikh leaders.

In June 1984, Indian forces stormed the Golden Temple, the holiest Sikh shrine in Amritsar, where separatists had taken refuge.

In more recent years, the Indian government has repeatedly warned that Sikh separatists were trying to make a comeback.

Read more: What is the Khalistan movement?

The diplomatic row saw diplomats expelled by both India and Canada.

The Indian government said it “completely rejected” Mr Trudeau’s allegations and added: “We are a democratic polity with a strong commitment to rule of law.”

The dispute derailed trade talks between the two countries and ultimately saw Canada withdraw 41 of its 62 diplomats in India.

At the time, Canada did not provide public evidence to back up Mr Trudeau’s allegations. However, it did reveal the claims were based on intelligence provided by a major ally and surveillance of Indian diplomats in the country.