I FIND it interesting that a warning from the International Monetary Fund (IMF) to the UK Government that they must not promise major tax cuts in their next Budget is followed, the very next day, by the UK Chancellor announcing that he might not have enough to allow for big tax cuts in his next Budget. Now why was that, and what is the relationship between the two?

If you are looking for some analysis of this relationship, or some economic explanation in the media, you will not find it.

Are these events not related, is it just coincidence? I would suggest that this is not just a coincidence, this was a direct warning from the IMF to the UK Government, which the UK felt obliged to respond to without delay. So what is going on?

READ MORE: IMF urges UK Government not to impose further tax cuts

The UK’s economic position is very weak in international trade terms. Put simply, the UK is importing more goods and services than it is exporting, and has been doing this for years now. Since goods and services are real wealth, this means in economic terms the UK is getting more wealth coming in than it is paying for. This is only possible because of the international financial arrangements which allow the UK to do that by increasing its financial debts to other countries.

Now the UK uses its currency as an international exchange currency, therefore the “exchange value” of that currency is not within the UK’s economic control, indeed the IMF has much more control of that than the UK has.

Now if the UK in its present situation wants to give the wealthy UK citizens more wealth (by cutting their taxes) then it needs to pay for that with (a) higher productivity (producing more good for exports) or (b) taking it from worker’s wages, or public services, or (c) increasing its negative trade balance.

READ MORE: Government doesn't need your money - it needs you to need its money

The IMF can see that the UK is unable to do (a) or (b) and it is determined not to allow it to do (c). Indeed, that is what Liz Truss tried to do and we know where that led. So this warning from the IMF was clear: if the UK tries to reward its wealthy citizens by taking a bigger share from the international community then it will again find a run on the pound will stop that. The UK has no option but to obey the IMF because of its weak economy and currency.

I hope the SNP leaders are taking note of this. Because an independent Scotland which was foolish enough to continue to use the Pound Sterling would be under the control of the IMF and the Bank of England and could be crippled economically at any time they wanted to put pressure on it.

The message to them should be: Scotland’s balance of trade is a lot healthier, so with its own currency it would be able to make its own political decision and not be under this type of control.

Andy Anderson

AT First Minister’s Questions on Thursday the FM’s reply to a Tory question about the proposed increase in Scottish Water rates over the next three years said (and I paraphrase) that it was incredible to hear a Tory speaking about the effect of price increases on the population of Scotland, Well said, and a good reply.

But he then went on to compare Scotland’s rates with those of English and Welsh water companies. Why must he do that? It would be more appropriate to compare them with a similar-sized country such as Denmark, Norway or New Zealand, and would save us from having this eternal comparison in everything with our next-door neighbours. Their “standards” in everything are below par. Why must we be compared to them?

Paul Gillon
Leven, Fife