IMF urges UK spending-priority debate as defence costs rise

Britain needs to discuss public spending priorities as it finances a lasting increase in defence expenditure, IMF fiscal affairs director Rodrigo Valdes said on October 14. He spoke during the IMF and World Bank meetings in Bangkok.

Asked whether Britain should raise taxes or cut other spending to pay for defence, Valdes said many European countries faced similar challenges. He said raising substantially more revenue was difficult and could create economic distortions.

He also noted that defence expenditure was a continuing commitment. Governments therefore needed to identify sustainable sources of funding rather than rely indefinitely on additional borrowing.

At the same time, Valdes said Britain had already taken decisive action to reduce debt and deficits. The IMF’s recommendation was to maintain the planned course, rather than accelerate fiscal consolidation.