IMF Issues Warning to Incoming Prime Minister Andy Burnham
The International Monetary Fund (IMF) has issued a stark warning to Andy Burnham, who is set to become Prime Minister next week, urging him to adopt a cautious fiscal approach to prevent economic volatility. The Washington-based organisation published its advice in a new report, days before Burnham formally replaces Sir Keir Starmer in No 10 on Monday.
The IMF told Burnham to be "very selective in accommodating new demands" and to "stick to the deficit reduction plan" spearheaded by Chancellor Rachel Reeves. However, Reeves has indicated she will not remain in her role under Burnham, creating uncertainty about the incoming government's economic priorities.
IMF Report Details Fiscal Recommendations
The IMF report calls on Burnham to focus future spending reviews on "reallocating resources across departments rather than increasing total spending" and to maintain a response to the Iran war energy shock that is "tightly targeted, temporary and budget-neutral." This would mean avoiding universal support schemes, such as the energy price cap introduced after the 2022 crisis, which capped annual energy bills for a typical household at £2,500.
"Broad-based measures, such as cuts in energy taxes, outright energy price caps, or generalised subsidies, should be avoided, as they are costly, difficult to unwind, and weaken price signals," the IMF warned.
Uncertainty Over Chancellor Appointment
While Burnham has not yet confirmed any Cabinet appointments, Ed Miliband has been widely tipped as a possible successor for the Chancellor post. The IMF has previously praised Reeves' tenure for striking a balance between reducing the UK's deficit and "growth-friendly spending" in areas like health and education.
Responding to the report, Reeves said: "We have the right economic plan to build a stronger, more secure Britain, with the IMF backing the choices I've made to put the country in a much stronger position than it was two years ago."
