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Benjamin Nabarro, chief UK economist at Citigroup, has previously warned that Ms Reeves risks a “buyers’ strike” in the gilt market if she borrows too much.
The IMF warned that more urgent action was needed to stabilise debt in advanced economies, including the UK and US.
“Delaying adjustment will be costly,” it warned in its latest fiscal monitor. “With debt risks elevated in most countries and debt growing at a faster pace than in the pre-pandemic years in large countries, postponing adjustments would only make the required correction larger.
“Even more, waiting would also be risky. Country experiences suggest that high debt and the lack of credible plans for dealing with it can trigger adverse market reactions and leave little fiscal room for manoeuvre in the face of adverse shocks.”
Ms Reeves is widely expected to launch a raid on jobs, pensions, capital gains and inheritance in her maiden Budget on Oct 30, amid reports that she is preparing tax rises and spending cuts of up to £40bn.
The Institute for Fiscal Studies (IFS) has already warned that rises of this magnitude are needed to ensure Britain does not return to austerity.
However, the IMF’s analysis suggests that boosting public services spending while hiking taxes was not compatible with getting debt down in the medium term, with the Fund also recommending tax cuts over higher spending once debt is stabilised.
The IFS has warned that raising taxes by £25bn would push the tax burden up to 37.9pc – its highest share in peace time. £40bn in tax rises would push the burden over 38pc.