IMF Critical of UK Privatisation?

11 October 2018
A new IMF study concludes that Britain’s underlying public finances are among the worst in the world, thanks to the cost of bailing out the banks after the financial crisis and because “the UK has done more to sell off public assets and consequently reduce the possible income from assets that could offset demands on the public purse” says The Guardian.

Rather than just look at debt and deficits, International Monetary Fund (IMF) economists looked at the assets and liabilities of 31 countries and found that the UK is in a worse position than any other country in their study aside from Portugal. 

The Independent digs deeper:

The IMF’s report takes particular aim at the privatisation of public assets, the benefits of which it says are often merely an “illusion”.  The UK has undergone one of the most drastic privatisations of any economy since the early 1980s. 

Under the Conservative government since 2015, policy has gone a stage further, incentivising departments and local authorities to sell off assets to fund day-to-day spending under the premise that such an approach is necessary to cut the deficit.

But the IMF economists said the tendency of governments to focus on debt “misses large swaths of government activity and can fall victim to illusory fiscal practices”.

When public assets are taken into account, selling a public utility, for example, may do nothing to improve the public finances, the IMF said.

“For instance, privatisations increase revenue and lower deficits but also reduce the government’s asset holdings,” the report stated.

Rosa Pavanelli, PSI General Secretary, says : 

"This is further evidence that the UK model of privatisation has failed, at so many levels.  Our advice to countries on the receiving end of this recipe is to resist and oppose.  We call on the UK government to immediately cease proselytizing and even imposing privatisation on other countries.  After the failures in rail, water and energy privatisation, with the bankruptcy of privateer Carillion, and now the IMF analysis, what more evidence is needed to completely disavow these policies?"

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