Chancellor Kwasi Kwarteng must use an October 31 statement on government finances to abandon parts of his proposed tax cuts that caused a "market malfunction" in the UK financial system, the IMF's chief economist said on Tuesday.
“Our advice is that fiscal policy should be cognisant and should be as close to neutral,” Pierre-Olivier Gourinchas said. “In the UK we’ve seen market malfunction and there has been a need for the Bank of England to come in and address that malfunction.
Mr Kwarteng has been told to find spending cuts of more than £60 billion ($66bn) if he is to meet his target to get public finances back under control but there is also increasing pressure to climb down from his projected cuts.
The Institute for Fiscal Studies (IFS) said it was not possible to deliver cuts on that scale through efficiency savings and “trimming the fat” and that it would require major cuts to public services.
“It is very clear that stability can be improved in the financial markets and more broadly with a fiscal package that is consistent with what the Bank of England is trying to do," Mr Gourinchas said.
The Bank of England stepped in with emergency action for the second day running to head off a “fire sale” of UK government bonds after market turmoil triggered by the chancellor’s mini-budget announcement.
The IMF added in its latest World Economic Outlook report that the slowdown of the global economy has intensified since April amid “stubbornly” high inflation.
In the UK, the economy is projected to grow at a rate of 3.6 per cent in 2022, a 0.4 per cent upgrade from the IMF’s previous forecast in July.
However, growth will then fall sharply to only 0.3 per cent in 2023, with the IMF downgrading its forecast by 0.2 per cent from 0.5 per cent.
Only Germany and Italy will see weaker growth than the UK among the world’s advanced economies, with the IMF forecasting a decline for both countries in 2023.
Russia’s economy is expected to contract by 2.3 per cent next year, the biggest fall of all the nations included in the projections.
The UK and other countries have recently increased base interest rates to help tame surging inflation, making borrowing more expensive for households and businesses.
The Bank of England’s interest rate is currently 2.25 per cent and is expected to be raised further at the next meeting of decision-makers in November.
This is set to take a toll next year as consumers cut back on spending and businesses investment less, resulting in slower growth, the IMF said.
The body noted that its forecast was prepared before the government unveiled its mini-budget, which set out sweeping tax cuts including on stamp duty and income tax.
It said: “The fiscal package is expected to lift growth somewhat above the forecast in the near term, while complicating the fight against inflation.”
Conflict, drought, famine
Estimates of the number of deaths caused by the famine range from 400,000 to 1 million, according to a document prepared for the UK House of Lords in 2024.
It has been claimed that the policies of the Ethiopian government, which took control after deposing Emperor Haile Selassie in a military-led revolution in 1974, contributed to the scale of the famine.
Dr Miriam Bradley, senior lecturer in humanitarian studies at the University of Manchester, has argued that, by the early 1980s, “several government policies combined to cause, rather than prevent, a famine which lasted from 1983 to 1985. Mengistu’s government imposed Stalinist-model agricultural policies involving forced collectivisation and villagisation [relocation of communities into planned villages].
The West became aware of the catastrophe through a series of BBC News reports by journalist Michael Buerk in October 1984 describing a “biblical famine” and containing graphic images of thousands of people, including children, facing starvation.
Band Aid
Bob Geldof, singer with the Irish rock group The Boomtown Rats, formed Band Aid in response to the horrific images shown in the news broadcasts.
With Midge Ure of the band Ultravox, he wrote the hit charity single Do They Know it’s Christmas in December 1984, featuring a string of high-profile musicians.
Following the single’s success, the idea to stage a rock concert evolved.
Live Aid was a series of simultaneous concerts that took place at Wembley Stadium in London, John F Kennedy Stadium in Philadelphia, the US, and at various other venues across the world.
The combined event was broadcast to an estimated worldwide audience of 1.5 billion.
Red flags
- Promises of high, fixed or 'guaranteed' returns.
- Unregulated structured products or complex investments often used to bypass traditional safeguards.
- Lack of clear information, vague language, no access to audited financials.
- Overseas companies targeting investors in other jurisdictions - this can make legal recovery difficult.
- Hard-selling tactics - creating urgency, offering 'exclusive' deals.
Courtesy: Carol Glynn, founder of Conscious Finance Coaching
UAE currency: the story behind the money in your pockets
COMPANY%20PROFILE
%3Cp%3E%3Cstrong%3EName%3A%3C%2Fstrong%3E%20Floward%0D%3Cbr%3E%3Cstrong%3EBased%3A%20%3C%2Fstrong%3ERiyadh%2C%20Saudi%20Arabia%0D%3Cbr%3E%3Cstrong%3EFounders%3A%20%3C%2Fstrong%3EAbdulaziz%20Al%20Loughani%20and%20Mohamed%20Al%20Arifi%0D%3Cbr%3E%3Cstrong%3ESector%3A%20%3C%2Fstrong%3EE-commerce%0D%3Cbr%3E%3Cstrong%3ETotal%20funding%3A%20%3C%2Fstrong%3EAbout%20%24200%20million%0D%3Cbr%3E%3Cstrong%3EInvestors%3A%20%3C%2Fstrong%3EAljazira%20Capital%2C%20Rainwater%20Partners%2C%20STV%20and%20Impact46%0D%3Cbr%3E%3Cstrong%3ENumber%20of%20employees%3A%20%3C%2Fstrong%3E1%2C200%3C%2Fp%3E%0A
Match info
Bournemouth 0
Liverpool 4 (Salah 25', 48', 76', Cook 68' OG)
Man of the match: Andrew Robertson (Liverpool)
Mohammed bin Zayed Majlis
Key findings of Jenkins report
- Founder of the Muslim Brotherhood, Hassan al Banna, "accepted the political utility of violence"
- Views of key Muslim Brotherhood ideologue, Sayyid Qutb, have “consistently been understood” as permitting “the use of extreme violence in the pursuit of the perfect Islamic society” and “never been institutionally disowned” by the movement.
- Muslim Brotherhood at all levels has repeatedly defended Hamas attacks against Israel, including the use of suicide bombers and the killing of civilians.
- Laying out the report in the House of Commons, David Cameron told MPs: "The main findings of the review support the conclusion that membership of, association with, or influence by the Muslim Brotherhood should be considered as a possible indicator of extremism."
