- Britain is facing tough questions about rising labor inactivity and NI cuts
- Prime Minister Rishi Sunak has vowed to crack down on Britain’s rising healthcare bill
- A full IMF delegation will conduct an ‘Article 4’ inspection
Under pressure: Chancellor Jeremy Hunt
Britain will face tough questions about rising labor inactivity and cuts in national insurance contributions when inspectors from the International Monetary Fund (IMF) arrive next month.
It comes as concerns grow over the number of people who have left work due to long-term illness – which has reached a record 2.8 million.
“One area we need to look at is the quality of healthcare, and another area is the way disabilities are reported,” said Helge Berger, a top IMF official for Europe.
His comments came in the wake of Prime Minister Rishi Sunak’s pledge to crack down on Britain’s rising healthcare bill.
“Most of the growth momentum in Britain comes from a growing labor force due to migration,” Berger has claimed over the past two years.
He suggested that with the number of Britons out of work, productivity is suffering and the whole area needs further investigation.
A full IMF delegation will spend up to two weeks in Britain for what is known as an ‘Article 4’ inspection and will meet with Chancellor Jeremy Hunt and the Treasury, the Office for Budget Responsibility and other officials and thinkers. tanks while they do their work. A meeting is also expected to take place with opposition leaders.
The chancellor has sought to boost efforts to curb economic activity by pushing for stricter tests for eligibility for health benefits, which are significantly more generous than unemployment benefits and universal credit benefits.
He has also tried to accelerate the path to the labor market.
But March unemployment data shows economic inactivity is still rising, despite nearly 1 million job openings.
A clash of views between the government and the IMF seems certain after the Chancellor’s successive cuts of 2 percent to national insurance premiums for employees.
The IMF has made clear in Washington that the priority for Western democracies is to build “fiscal buffers” – fiscal space to deal with future financial crises – after the large increases in loans and debt caused by the pandemic and the war on Ukraine .
Berger said the IMF’s priority in London would be “fiscal consolidation” – the Fund’s preferred term for cutting spending and raising revenues.
“We think this is appropriate given the trajectory,” the Fund official emphasized. The IMF will mainly focus on ‘healthcare expenditure’.
Hunt announced measures in the March Budget to reduce healthcare costs by transforming technology in the failing NHS and using breakthroughs using artificial intelligence (AI).
The Fund suggested that the most efficient way to tackle revenue shortfalls is to close loopholes – a policy favored by Shadow Chancellor Rachel Reeves. It also favors taxing wealth.
The chancellor started by restoring the tax base in the budget.
He abolished non-domicile status for British residents with foreign references.
Reeves has continued to advocate a harsher regime with fewer escape routes.
She is also in favor of restricting tax credits for oil companies in the North Sea.