IMF advised UK government to continue to spend to safeguard firms and jobs in a press conference attended by Rishi Sunak, UK Chancellor, and Kristalina Georgieva, IMF Managing Director held on Wednesday, Oct. 29.
“We support an additional fiscal push necessary to enhance the safety net, but also to boost public investments. It offers an opportunity to build forward and addresses the UK's climate targets, reduces regional inequality, helps those who do end up losing their livelihoods,” said Georgieva
Sunak announced the UK’s public sector plan to invest over 600 billion pounds to build a strong economy for future generations based on IMF policy recommendations.
“As I set out in our budget over the next five years, the public sector will invest over 600 billion pounds and brought forward a proportion of this to support activity in the near-term. The IMF overwhelmingly endorsed our investment plans, saying it will address productivity, climate goals and regional inequality. At the same time, we have a responsibility to ensure that the next generation inherits a strong economy,” said Sunak.
Georgieva advised that policies should remain anchored within robust frameworks and that this crisis points to issues in setting new fiscal rules, more constrained monetary policy space, and gaps in non-bank financial regulation.
“Here is my main message today. Continued policy support is essential to address the pandemic and to sustain and integrate a recovery. We welcome that the UK authorities have committed to deliver it as long as necessary so we can manage expectations and boost confidence,” said Georgieva
She also added that the state of the economy pre-pandemic was not in good shape and recommended working on policies that will help governments not just recover from the pandemic but also from those preexisting conditions.
“Obviously, not everything we had in 2019 is going to come back post crisis. How are firms supported when they have the potential for recovery and what is done to gradually recognize that not every single one is going to make it. what is being done through active labor market policies to help workers transition to other types of jobs. This is going to make a huge difference in terms of how much scarring we have,” said Georgieva.