Hunt ready to cut NICs again despite IMF's warning of £30bn fiscal hole

Jeremy Hunt, the chancellor, is preparing a pre-election cut in national insurance, Downing Street has indicated - despite a warning from the International Monetary Fund of a looming £30bn hole in the public finances.

- Larry Elliott

Rishi Sunak's spokesperson said the government rejected the IMF's argument that there was no room for a third cut in NI in less than a year and that the Treasury should instead be thinking about tax increases or spending cuts.

The spokesperson said: "I think on that we respectfully disagree with the IMF," adding the prime minister's view was that "cutting national insurance, rewarding work, is an important part of growing the economy".

Downing Street was responding to the release of the IMF's annual health check on the UK in which it said "difficult choices" lay ahead.

Speaking at a press conference, Kristalina Georgieva, the IMF's managing director, said a cautious approach to tax cuts was needed because the pandemic and Russia's invasion of Ukraine had damaged the public finances. "We are genuinely concerned, not just for the UK, for all countries that have used fiscal buffers extensively, that they must do more to rebuild these buffers," she said.

The IMF said it would have advised Hunt not to cut national insurance contributions (NICs) by two percentage points in last year's autumn statement and March budget, and expressed strong doubts about the wisdom of plans for another cut in NICS before polling day.