IMF gives Rachel Reeves political cover to ‘refine’ UK fiscal rules

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Rachel Reeves has been given a political cover by the IMF to “refine” its financial structure to not change the course of the economy within the autumn budget.

The fund, however, also warned the UK Chancellor that his financial room was insufficient for clevering, it was necessary to increase or expendity “if pushing”.

The IMF On Tuesday, Reeves said that instead of the current double-annual review, the budget could “promote further policy stability” by having only an office to evaluate the budget responsibility for its self-sufficient financial rules.

According to several well -known officials, the idea is being discussed in the treasury. However, Reeve’s allies said that his promise to financial rules, for which he must balance the daily expenditure with revenue by 2021-5, “non-negotiable”.

Reeves Financial Surveillance was forced to unveil a 14 billion dollar plan to fix Britain’s Strred Public Finances in the Spring Statement in addition to the new forecast by OBR.

The Chancellor’s skills were further questioned to keep an eye on the expense of the pensioner after the decision of Sir Care Starmer he unveiled the fuel subsidies last year and after watch Scrapping the two-infant benefits capsThe

At the same time, higher B is the hits of the cost of receiving £ 9.9bn of Reeves is away at the “headroom”.

The reeves’ headroom is easily removed by the small forecast change by OBR, which usually produces two “economic and financial aspects” in spring and autumn.

The IMF UK’s head of the UK mission, Luus Ierod, says: “To reduce the reactivity of short-term policies, the first solution should be a higher headroom.[But]We know this is very difficult, not just politically, but from an economic point of view, because some expenses are very important ””

Reeves allies said “There was always discussion on how we can improve the financial structure”, but at the political level, there is no plan to go to a single annual OBR assessment of any financial rules.

The recommendation of the IMF came to its annual health check The British EconomyIt has increased the economic growth from 8.5 percent in 2021 to 8.2 percent. Before Donald Trump’s tariff, the IMF predicted that the economy would increase by 1.6 percent this year.

The IMF also warned about “the course of the course and to reduce the planned deficit in the next five years”, calling on the “significant risk” from global uncertainty and “significant risk”.

Due to “weak productivity”, Britain’s moderate-mayor growth was still predicted to remain “under control” 1.4 percent.

Reeves said: “The United Kingdom was a rapid growing economy for the first three months of this year and today IMF promoted our growth forecast.”

However, Chancellor was growing by his financial rules, some economists warned that he had to raise taxes again in his autumn budget.

This fund was in favor of “further refinement” in financial rules to avoid the government’s headroom and to avoid minor economic amendments to create pressure for frequent policy changes.

The proposed IMF reforms include going to a forecast every year and introducing a formal process to prevent small rules from the trigger of corrective steps.

Funds warned that Britain’s limited headroom means additional taxes or expenditure measures would be needed, adding, added that the next five years need to reduce the “net debt stability and reduce the weakness of the gilt market” planned deficit.

These searches arrive two weeks before the higher stakes expenditure review, where the Reeves are expected to determine some Whitehol Divisional budget cuts.

The cost of adoption of rising orrow has already reduced the slim headroom since October last year, forced the government Switch to the short-mayor orrow To reduce the bill of interest.

The IMF reports in his report that Rive’s spending plans were “credible and growing”, including “good balance in the financial stability of supporting and defending”. However, it warned about negative risk as continuous global trade uncertainty and household savings increase.

The funds called for “three compulsory constraints of growth” – stability, capital and skills – priority because it warned that continuous weak productivity continued to weight on the economy in the middle term.

The IMF noted that the government’s growth agenda focused on the right fields, with structural reforms, the key to increasing priority growth.

The IMF said the financial preferences around the pension expenditure of higher health care and the UK aging population need to be resolved in the long run.

Calibrating has become “more complicated” despite the recent selection of inflation, the IMF says “remains flexible in the light of superior uncertainty” and “to be flexible in the light of advanced uncertainty” and gradually called on the Bank of England to ease interest rates.

Inflation jumped into one unexpectedly Maximum 3.5 percent of 15 months Behind the higher utility bills in April, according to official data last week.