ALEX BRUMMER: IMF must explain its criticism of Kwarteng’s mini-budget

Treasury Select Committee Chairman Harriett Baldwin has released prints in protest at the International Monetary Fund’s refusal to provide public testimony on former Chancellor Kwasi Kwarteng’s disastrous mini-budget.

One can understand the reluctance to testify among top officials, General Manager Kristalina Georgieva and Chief Economist Pierre-Olivier Gourinchas.

After all, the IMF has 190 members, including all developed countries.

The idea of ​​having to testify directly in national parliaments and get caught up in local squabbles would be a political and logistical nightmare.

It could also undermine the fund’s role as a largely reliable independent adjudicator.

The usual way its officers communicate with customers is through regular annual Article 4 inspections or through National Directors in Washington.

The UK has the special privilege of having its own seat on the Board of Directors.

As an experienced participant in IMF meetings and a follower of his usual way of doing business with Western democracies, I have genuine sympathy for Baldwin’s request. In its harsh and open criticism of the Truss-Kwarteng government, the IMF strayed far from the norm.

Initially, a spokesperson made a statement to Reuters on September 28 last year about the mini-Budget.

It was noted that ‘we do not recommend large and untargeted fiscal packages at this point, as it is important that fiscal policy does not conflict with monetary policy’.

At the annual meetings in Washington, IMF officials argued that there was nothing strange about the intervention, but they did their best to find parallels in the form of direct commentary on other G7 countries.

No doubt the words backfired, accelerating the run on the pound and the burst of government bond yields (with a lasting effect on fixed rate mortgages).

During his press conference on the World Economic Outlook’s autumn report, Gourinchas used a colorful metaphor arguing that the combination of interest rate tightening and fiscal liberality in the UK was a bit like two people in the front of the car trying to steer each in a different direction. .

Georgieva joined a lecture 24 hours later, noting that the UK had robust financial institutions in the form of the Office for Budget Responsibility, the Treasury and the Bank of England and should listen to them. In her private session with Kwarteng, she was even more direct.

This was by no means the only intervention by the IMF in British political debates.

Georgieva’s predecessor Christine Lagarde used a May 2016 Treasury press conference to warn that Brexit would be ‘fairly bad to very, very bad’.

The willingness of mainly European IMF officials to openly round to Britain outside of regular assessments is disproportionate.

Having set itself up as the arbiter of a UK economic event, it is asymmetrical to refuse to provide evidence, at least via video, to the House of Commons.

The fund is wrong to oppose public accountability to parliament from a founder shareholder. It should think again.

Risk premium

Cold snaps are so rare in the UK that they always surprise us. After leaving Brighton on December 11, a day of heavy snowfall, I have not been the least bit surprised by a surge in motorcycle claims.

There was a horrible scene of cars sliding uncontrollably down the hills on their way to the London road. Now Direct Line is reporting heavy claims for burst pipes.

The woes cast a shadow over the sector and wiped out a hefty £1.45bn from stocks. Shareholders may be paying the price now, but it is policyholders who will be penalized when premium renewals expire.

You never win with insurance.

New look

We are all experts on billionaires following the brilliant TV series Succession, widely believed to be based on changing tides within Rupert Murdoch’s family of media.

In a new, unrelated series, one of Europe’s richest tycoons Bernard Arnault has tipped his hat to eldest daughter Delphine by putting her in charge of haute couture firm Christian Dior.

She joins another female scion at the top: Marta Ortega, daughter of founder-owner Amancio Ortega, who heads Zara fashion empire Inditex. How times have changed.