IMF upgrades UK growth but warns of looming trade war hit
Last week, the Prime Minister announced an about-turn on his flagship policy to withhold winter fuel payments from some pensioners, while the Government is also considering lifting the two-child limit on benefits to families.
Mr Eyraud said: 'We take note of the announcement of the PM to change the winter fuel payments. From the IMF perspective, it is very important that the authorities stay the course, that they stick to their commitment to reduce fiscal deficits gradually over the medium term.
'The authorities will need to offset that with other savings measures somewhere else. Our view is that these other measures could be both on the tax or on the spending side.'
The IMF also warned that finances were on a dangerous path in the longer term, as rising pension and healthcare spending would leave future governments having to choose between significantly raising taxes or slashing spending.
Ms Reeves hailed the upgraded forecast. She said: 'The UK was the fastest-growing economy in the G7 for the first three months of this year and today the IMF has upgraded our growth forecast.
'We're getting results for working people through our Plan for Change – with three new trade deals protecting jobs, boosting investment and cutting prices, a pay rise for three million workers through the National Living Wage, and wages beating inflation by £1,000 over the past year.'
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