UK debt target at risk, IMF warns

The International Monetary Fund (IMF) cautioned the UK government about missing its debt target and advised against tax cuts before an upcoming election, Reuters reported on Tuesday.

The IMF upgraded its projection for British economic growth in 2024 to 0.7 per cent from the previous forecast of 0.5 per cent, reflecting strong early 2024 growth data. However, it criticised recent tax cuts, including lower social security contributions.

The IMF recommended that the Bank of England cut interest rates two or three times this year. Despite a “soft landing” after a brief recession in the second half of 2023, growth remains sluggish, and debt is projected to reach 97 per cent of GDP by 2028/29.

The IMF urged Britain to consider revenue-raising measures, tighten spending, and avoid additional tax cuts.

The state pension system should be indexed to inflation, and immigration policies may impact growth. The Conservative Party faces an election challenge from the opposition Labour Party.