Chancellor Jeremy Hunt urged not to cut taxes by International Monetary Fund

Published

1 year ago

January 30, 2024

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The International Monetary Fund (IMF) has said Jeremy Hunt should not be planning to cut taxes any time soon.

In what will be seen as a bombshell intervention ahead of this year’s election, the Fund, widely regarded as the world’s most authoritative economic body, said its analysts had advised the UK Treasury not to cut taxes.

And, in a further blow to the chancellor, it expressed scepticism about his spending plans for the coming years, raising questions about his ability to meet his own fiscal rules.

The comments, issued alongside the Fund’s latest update to its economic forecasts, comes after the chancellor signalled that he plans to cut taxes in March’s spring Budget.

An IMF spokesman said: “As noted in the 2023 Article IV consultation, preserving high-quality public services, and undertaking critical public investments to boost growth and achieve the net zero targets, will imply higher spending needs over the medium term than are currently reflected in the government’s budget plans.

“Accommodating these needs… will already require generating additional high-quality fiscal savings, including on the tax side.

“The IMF has recommended strengthening carbon and property taxation, eliminating loopholes in wealth and income taxation, and reforming the pensions triple lock.

“It is in this context that staff advises against further tax cuts.”

The comments came as the Fund cut its forecast for UK growth next year, from 2% to 1.6%.

However, the UK is no longer forecast to be the slowest growing economy among the Group of Seven industrialised nations, after the Fund cut its outlook for Germany this year to 0.5% – below Britain’s (unchanged) 0.6% forecast.

However, it is the IMF’s comments on taxation which will most upset the Treasury.

Mr Hunt has said repeatedly that he plans to cut taxes in future fiscal events.

Many inside the Conservative Party believe tax cuts are their strongest hope of improving their polling ahead of the general election.

That those tax cuts are seen by the world’s leading economic authority as an imprudent move will undermine the chancellor’s case.

The chancellor said: “The IMF expect growth to strengthen over the next few years, supported by our introduction of the biggest capital investment tax reliefs anywhere in the world, alongside National Insurance cuts to improve work incentives. 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.”

Politics

Jingye and Whitehall officials hold talks over British Steel future

Published

45 mins ago

July 9, 2025

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Jingye and Whitehall officials hold talks over British Steel future

The Chinese owner of British Steel has held fresh talks with government officials in a bid to break the impasse over ministers’ determination not to compensate it for seizing control of the company.

Sky News has learnt that executives from Jingye Group met senior civil servants from the Department for Business and Trade (DBT) late last week to discuss ways to resolve the standoff.

Whitehall sources said the talks had been cordial, but that no meaningful progress had been made towards a resolution.

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Jingye wants the government to agree to pay it hundreds of millions of pounds for taking control of British Steel in April – a move triggered by the Chinese group’s preparations for the permanent closure of its blast furnaces in Scunthorpe.

Such a move would have cost thousands of jobs and ended Britain’s centuries-old ability to produce virgin steel.

Jingye had been in talks for months to seek £1bn in state aid to facilitate the Scunthorpe plant’s transition to greener steelmaking, but was offered just half that sum by ministers.

British Steel has not yet been formally nationalised, although that remains a probable outcome.

Jonathan Reynolds, the business secretary, has previously dismissed the idea of compensating Jingye, saying British Steel’s equity was essentially worthless.

Last month, he met his Chinese counterpart, where the issue of British Steel was discussed between the two governments in person for the first time.

Jingye has hired the leading City law firm Linklaters to explore the recovery of hundreds of millions of pounds it invested in the Scunthorpe-based company before the government seized control of it.

News of last week’s meeting comes as British steelmakers face an anxious wait to learn whether their exports to the US face swingeing tariffs as part of US President Donald Trump’s trade war.

Sky News’s economics and data editor, Ed Conway, revealed this week that the UK would miss a White House-imposed deadline to agree a trade deal on steel and aluminium this week.

Jingye declined to comment, while a spokesman for the Department for Business and Trade said: “We acted quickly to ensure the continued operations of the blast furnaces but recognise that securing British Steel’s long-term future requires private sector investment.

“We have not nationalised British Steel and are working closely with Jingye on options for the future, and we will continue work on determining the best long-term sustainable future for the site.”