IMF’s anti-tax cut stance may give Rishi Sunak cover to resist Tory right
Jeremy Hunt was quick to welcome the International Monetary Fund’s improved economic forecasts. Britain was now on track for the lowest rate of growth outside a recession in the postwar era. Still, it was a “big upgrade” from the Washington-based fund compared with a month ago, the chancellor said.
In its annual article IV health check on the British economy, the IMF said it expected gross domestic product to grow by 0.4% this year, tearing up its estimate in April of a 0.3% contraction.
That a UK recession could now be avoided this year was hardly the big news in the IMF report. The Bank of England made a similar assessment earlier this month, amid signs that household spending and business activity were holding up better than feared despite the cost of living crisis.
Instead, the significance was in the political subtext: even though Britain’s economy was doing little more than tread water, Rishi Sunak’s government was doing a better job of paddling than his predecessor.
After the debacle of the Liz Truss mini budget, there had been “a very significant turnaround in policy”, said Kristalina Georgieva, the IMF’s managing director. Just over six months ago, the fund had made a rare public intervention, criticising the former prime minister’s real-time experiment with unfunded tax cuts directed at the rich. Now it was praising hersuccessor’s easier relations with the EU, childcare reforms, and business investment incentives.
It is a stamp of approval that could help the prime minister and his chancellor when faced with rebellious Conservative MPs, rankled by the party’s dismal performance at the local elections, and a growing feeling on the Tory right that Sunak’s brand of bean-counting managerialism lacks bite.
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