Chancellor Jeremy Hunt is at risk of missing five-year debt targets for the UK economy after cutting national insurance during the Spring Budget, the International Monetary Fund has warned.
Under self-imposed rules, each UK chancellor aims to get debt falling as a percentage of gross domestic product (GDP) by the final year of a five-year forecast.
However, the IMF forecasts UK debt to increase in every year until 2029, when it is expected to jump to 98% of GDP.
According to the IMF, such forecasts, which were higher than previously, were in part driven by Hunt’s move to cut national insurance by 2% in last month’s Spring Budget, as well as the Autumn Statement beforehand.
“Recent policy changes, such as a significant cut to NI in the UK, although part-funded by well-conceived revenue-raising measures, could worsen the debt trajectory in the medium term,” the IMF warned
“Population ageing and labour market mismatches are further expected to exert pressure on fiscal positions.”
The cuts had come as the government prepares for an inevitable general election, though the IMF warned those in power should refrain from such moves in the world's “biggest-ever election year”.