The head of the International Financial Fund (IMF) has warned Rishi Sunak that “now is not the time to balance the books”.
In an interview with Skies News, Kristalina Georgieva said the united kingdom must stand ready to spend more to aid businesses and households through the 2nd surge of the pandemic.
Her comments come as the chancellor faces criticism for providing much less generous fiscal support for the economic climate as Downing Street imposes more restrictions.
Ms Georgieva, who succeeded Christine Lagarde because managing director of the IMF this past year, said while the UK had “done very well” with its economic stimulation plans in the early months from the pandemic, “now is not yet the time for you to balance the books”.
She said: “Of course, now could be a good time to think about balancing the textbooks down the road. But it is more important to make certain that firms and workers are backed while we are still wrestling with all the pandemic. ”
The message is specially striking since it comes less than a week after the chancellor’s first party meeting speech, in which he pledged: “This Conservative government will always balance the particular books. If instead we claim there is no limit on what we can invest… what is the point in us? inch
Ms Georgieva’s feedback come at the end of the IMF’s yearly meetings, during which the Fund advised countries around the world to spend as required if they need to impose further lockdowns.
Ms Georgieva said that the particular chancellor was right not to lengthen support to households universally, because it did with the initial furlough structure.
“We cannot offer support to everyone forever, realizing that the post pandemic economy will change from the one we had before, inch she said.
Discussing governments more generally, she additional: “It is paramount for government authorities not to withdraw (economic) support too early. Because if it is done, we danger massive bankruptcies and unemployment.
“We have low interest rates almost everywhere and governments can afford to lend. ”
The change is significant, since the IMF is usually seen as the world’s fiscal watchdog, keen to keep spending and asking for under control.
Ms Georgieva said she was hopeful that will Boris Johnson and EU leaders could seal a Brexit deal, even though the prime minister has signalled that the talks are actually over.
“We have to aim for the best possible outcome, ” she said.
“The evaluation both by others and yourself does point to the fact that there are substantial consequences if there is no agreement. They are the last few weeks of negotiations : there is still a possibility to continue to operate towards that agreement.
“The clock is ticking yet it’s not yet midnight. ”
A Treasury spokesperson stated: “There’s no disagreement on this. We have been clear that the immediate priority would be to protect jobs and get the NHS the funds it needs to defeat the virus.
“We’ve invested over £200bn this year and will carry on and provide the support that’s needed. So we believe the IMF.
“We also agree with them that within the longer term sustainable public finances are crucial and it’s important to be honest about this. ”