John Swinney: I am very concerned by IMF statement on UK tax plans

The International Monetary Fund said it was ‘closely monitoring’ the situation, urging the Chancellor to ‘re-evaluate the measures’.

28 September 2022

Scotland’s Deputy First Minister has said he is “very concerned” following an extraordinary statement from the International Monetary Fund on the UK Government’s tax plans.

Chancellor Kwasi Kwarteng last week announced in a so-called mini-budget plans to scrap the top rate of tax and cut the basic rate to 19p in the pound.

The announcement sent the the pound spiralling, with it eventually falling to an all-time low against the dollar.

The IMF issued a statement on Tuesday night saying it was “closely monitoring” the situation in the UK and urged the Chancellor to “re-evaluate the tax measures”.

Kwasi Kwarteng walking out of No 11
Kwasi Kwarteng announced his plans last week (Aaron Chown/PA)

Speaking to the BBC on Wednesday, John Swinney said: “I’m very concerned by what the International Monetary Fund have said overnight.

“I think the warnings are very stark about the folly of the decision that have been taken by the UK Government.

“I think the IMF’s criticism of the unfunded tax cuts which will simply increase the cost of borrowing – and we’re already seeing that with punishing increases in interest rates which will affect people who have mortgages around the country and some of that increase in mortgage rates will dwarf the small savings that will be made in the unfunded tax cuts that have been made.”

Mr Swinney, who is in control of Scotland’s finances while Finance Secretary Kate Forbes is on maternity leave, urged the UK Government to “revisit” the decisions made last week.

“Friday’s unfunded tax cuts will cause two things to happen: they will require a significant reduction in public expenditure in the UK and that will have a terrible effect on public spending in Scotland if the UK Government is to respond to the markets,” he said.

“And secondly, I think it will trigger a much deeper recession than would have been the case as a consequence of the turbulence that we’re experiencing now and that has the potential to have a knock-on effect into other countries and to effect global financial systems, which is a disaster for all of us.”

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