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Over the tax-cutting plan, the International Monetary Fund has openly criticized the UK government; it warned that the measures are likely to fuel up the cost-of-living crisis.
The IMF in an unusually outspoken statement said the proposal was likely to add to pressures pushing up prices and increase inequality. Sending the pound plunging, the markets have already raised alarm over the UK government’s plan. But the government says the tax measures will kick-start economic growth.
After IMF raised the concern over the UK government’s decision sterling fell by 0.7% to $1.06on Wednesday morning. It comes just after the currency hit a record low of around $1.03 on Monday. On Friday Chancellor Kwasi Kwarteng unveiled the biggest tax package in the country in 50 years. But the £45 billion cut has sparked fears that interest rates and government borrowing could surge.
The IMF works to stabilize the global economy and one of its key roles is to act as an early economic warning system. Though IMF understood that the tax-cutting plan aimed to boost growth but it is concerned that it could speed up the pace of price rise, which the central bank of the UK is trying to bring down.