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The United Kingdom’s tax cut proposal has sparked turmoil in financial markets as the United Kingdom curbs inflation.

UK Prime Minister Liz Truss’ tax-cut plan has drawn criticism from economists and investors, prompting the Bank of England to intervene on Wednesday to calm panicked markets.

The Biden administration, along with the Treasury Department, is concerned about the UK tax-cut plan, an administration official familiar with the matter told CNN on Thursday.

The danger for the United States is that any problem across the Atlantic could spill over into the global financial system and the global economy.

US Commerce Secretary Gina Raimondo criticized Truss’s plan on Wednesday, pointing out that the British pound has “been flat” since the proposal was unveiled.

“A policy of cutting taxes, and simultaneously increasing spending, is not something that will fight inflation in the short term or position you well for economic growth in the long term,” Raimondo said in response to a question at an event. Organized by the Hamilton Project at the Brookings Institution.

Raimondo sought to contrast the UK approach with the Biden administration.

“We’re taking a different policy … we’re taking inflation seriously, letting the Federal Reserve do its job, watching deficit spending,” she said. “Investors, businessmen want world leaders to take inflation seriously. And this is hard to see from this new government. ”

Biden officials have raised their concerns about the UK plan with the International Monetary Fund, according to Bloomberg News, which previously reported on the concerns of US officials.

The United States is the largest shareholder in the IMF, which this week issued a rare criticism of the UK plan, urging the country’s officials to “reassess” the tax cuts.

“Given elevated inflationary pressures in many countries, including Britain, we do not recommend large and targeted fiscal packages at this stage, as it is important that fiscal policy does not act at cross-purposes with monetary policy,” an IMF spokesman said earlier. the week

Truss defended her tax plan, telling CNN’s Jake Tapper last week that her government is encouraging businesses to invest and helping ordinary people with their taxes.

Some US officials are careful not to directly criticize their UK counterparts.

US Treasury Secretary Janet Yellen declined to comment directly on the UK’s economic plan on Tuesday, although she noted that the UK, like the United States, was dealing with “significant inflationary issues”.

Asked if she was worried about chaotic markets, Yellen said “markets are doing well” and she did not see liquidity problems emerging.

Yet large swings in bond and currency markets raise questions about how well the markets are functioning.

A day after Yellen’s comments, the Bank of England announced an emergency intervention. The central bank pledged to buy UK government debt “to the extent necessary” to prevent a bond market crash and ease “dysfunction” in financial markets.

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