Rishi Sunak(Image: Getty)

The International Monetary Fund (IMF) has urged UK Chancellor Jeremy Hunt to refrain from tax cuts in the upcoming Budget, emphasizing the need for funds to support public services. In a significant setback for the chancellor and Rishi Sunak, the IMF also expressed skepticism about the government’s spending plans while downgrading the growth forecast for the UK economy from 2% to 1.6%.

Despite hints from both Hunt and the prime minister about potential tax cuts in the lead-up to the general election, critics highlight that the overall tax burden remains at a post-war high. The IMF stressed the importance of preserving high-quality public services making critical public investments for growth and achieving net-zero targets, suggesting that the government’s budget plans may fall short of meeting these needs, reported HuffPost UK.

The IMF recommended strengthening carbon and property taxation, closing loopholes in wealth and income taxation, and reforming the pensions triple lock. In light of these suggestions, the IMF cautioned against further tax cuts.

However, Hunt countered, stating that it is too early to determine the affordability of additional tax reductions in the Budget. He maintained the belief that strategic tax cuts could significantly contribute to boosting economic growth.

Recent polls indicate public preference for allocating any available funds to enhance public services rather than tax cuts. Despite this sentiment, the prime minister remains inclined toward tax reductions, stating that they align with the public desire for such measures. The ongoing discourse between the government’s fiscal priorities and the IMF’s recommendations adds complexity to the economic strategy ahead of the Budget.

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