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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.

British Chancellor of the Exchequer Jeremy Hunt speaks at the Resolution Foundation, in London, Britain December 4, 2023. REUTERS/Hollie Adams
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Chancellor Jeremy Hunt has hinted at tax cuts this year. Pic: Reuters

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.”

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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.

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Chancellor aims to cut taxes

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.”

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Roman Storm’s lawyers signal continuance if court allows hacker’s testimony

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Roman Storm’s lawyers signal continuance if court allows hacker’s testimony

Roman Storm’s lawyers signal continuance if court allows hacker’s testimony

The Tornado Cash co-founder is scheduled to go to trial on Monday, but his defense attorneys are still waiting on rulings for motions over witnesses in the case.

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Migrants deal a win for Starmer – and could help with fight against Reform

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Migrants deal a win for Starmer - and could help with fight against Reform

The bromance between Sir Keir Starmer and President Macron is so apparent – embraces all around.

This is some deft diplomacy from Sir Keir, who has been love-bombing his French counterpart ever since he became prime minister – trying to get closer ties, be it on security, on trade, and now of course on small boats.

And he has got a win today – he’s got President Macron to agree a deterrent deal.

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You remember the Conservatives were trying the Rwanda plan to deter people from coming by sending them back to Rwanda, a third country, if they came here illegally.

What the prime minister has agreed with President Macron today is a big deal. It’s a one in, one out deal.

What they’re going to do is, if someone arrives here illegally, they will be sent back to France, and in return, the UK will accept a legitimate asylum seeker. It might be someone who has family ties.

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How people smugglers dodge French police

It’s going to start off really small – think of it as a pilot – as they’re going to test it out, see if it works.

It might be just a handful of people being sent back, maybe just under a thousand or so by the end of the year. But they will hopefully, for the prime minister, scale it up and it could become a real deterrent.

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Farage reacts to UK-France migrant deal

I’ll leave you with just one more thought: As Prime Minister Starmer and President Macron were doing this deal today, Nigel Farage was in the English Channel documenting illegal migrants making that crossing – 79 people being picked up by Border Force, taken off a dinghy and into Dover.

Polling out this morning by Portland suggests four in 10 voters who are planning on going to Reform would go back to Labour if the prime minister tackles small boats and drives down the crossings.

There is a real political imperative for him to try to start to resolve this problem. It’s going to count at the ballot box – immigration is a top-three issue in this country when it comes to voters.

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US lawmakers to discuss crypto tax policy amid push to pass three bills

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US lawmakers to discuss crypto tax policy amid push to pass three bills

US lawmakers to discuss crypto tax policy amid push to pass three bills

The hearing notice suggested a focus on a tax framework for digital assets, but did not mention specific witnesses or policies previously proposed.

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