Transcript

Transcript of United Kingdom Staff Concluding Statement of the 2024 Article IV Consultation Press Briefing

May 22, 2024

PARTICIPANTS:

Moderator: 

JULIE KOZACK

Director, Communications Department

IMF

Speakers:

KRISTALINA GEORGIEVA

Managing Director 

IMF

S.M. ALI ABBAS

Assistant Director European Department

IMF

JEREMY HUNT

Chancellor of the Exchequer

UK

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T R A N S C R I P T

HUNT: Good morning, ladies and gentlemen. Welcome to this very important Article IV process.  And I want to start by thanking the IMF Team, because a lot of work goes into, you know, really quite a grueling exercise in which they go through all the assessments that we made of the UK economy.  And Managing Director, but also Alfred, Ali, Julie, all the IMF team have worked very, very hard and I want to thank them for that. 

I also want to congratulate Kristalina on her reappointment for a second term.  We were one of a number of countries that were absolutely delighted.  And I want to commend the work that you have been doing to try to build bridges in a very fractured world in a very, very challenging time.  And I see it behind the scenes, but I think it's also very visible publicly, and that is very, very important.

With respect to the UK Article IV process, the only thing I really want to say before I hand it over to the Managing Director is that the UK believes that we have global responsibilities at very challenging times.  Whether it is living up to our commitments on climate change, whether it is living up to our responsibilities with our aid budget, whether it is making a key contribution to global security.  And for that, we believe that a strong IMF is very important for the world because it is one of the few international organizations that brings together countries with very different value systems, very different outlooks, and encourages them to talk, and provides vital financial architecture.  

But from the UK's point of view, our global role is only possible if we have a strong economy, and we have been through a challenging time in the last couple of years.  As you all know, when I arrived as Chancellor, the Bank of England was predicting the longest recession in 100 years.  And we've taken a lot of very difficult decisions.  So we are very interested to hear what the IMF says in terms of the process we've been through.  And our big priority is not just stabilization, but also growth and increasing our long-term growth rate.  

So we are as excited as everyone else to hear what the Managing Director says.  And it is a great pleasure that I hand it over.  Thank you.

GEORGIEVA: Thank you very much, Chancellor, and many thanks to all of you for being here with us as we share the outcomes of this year Article IV Consultation. Our headline message today, actions of the UK authorities, Prime Minister Sunak, Chancellor Hunt, the government, and of course, Bank of England, combined with favorable energy price developments, are paying off.  The economy is growing, inflation is falling, and soft landing is in sight. 

As you are all aware, first quarter GDP surprise was on the upside, 0.6 percent, allowing us to upgrade our growth forecast for this year from 0.5 percent as it was in April to 0.7 percent today.  With inflation declining and real incomes recovering, we retain our expectations for growth in 2025 to strengthen to 1.5 percent.  Inflation has come down to 3.2 percent in March.  This is broadly in line with our April forecast.  As energy and food prices continue to fall and tight monetary policy, the job of Bank of England has produced the desired effect.  The labor market is gradually cooling.  Services inflation and pay growth remain high, but we see them also moderating that would allow inflation to durably return to the 2 percent target by early 2025. 

We assess risks to the outlook as balanced.  If we have greater pass-through from falling energy prices, that would bring inflation down and raise growth more than we expected.  Lower domestic demand could also reduce inflation, but with a different impact, with a more negative impact on growth.  And when you look at the medium-term, and this is really so important, we see firm implementation of structural reforms and the potential of technologies, especially artificial intelligence, to boost productivity and to boost the economy's growth potential.  Nothing could help more than having a favorable growth outlook. 

I want to highlight three messages that come from our Article IV on monetary policy,  on fiscal policy, on medium-term growth.  On monetary policy, we see it reaching an inflection point.  The Bank of England’s more neutral stance, with forward guidance resulting from it, is appropriate, and that is in light of recent downward surprises in inflation. 

So what is the next phase on monetary policy?  Next phase is to ease.  When and by how much will be decided by the Monetary Policy Committee’s data-dependent, meeting-by-meeting approach.  We think that rate cuts in the order of 50 to 75 basis points in 2024 would be appropriate. 

On fiscal policy, the government has done well to follow the prudent fiscal plan that it set out in November 2022.  And we particularly welcome the permanent capital allowances introduced to support business investment and a number of measures to boost labor supply. Both very important for growth prospects.  Looking ahead, there is still the important challenge that we highlighted last year:  to stabilize public debt and, at the same time, address pressing public service and investment needs.  And, like in many other countries, that would involve careful calibration of tax and spending choices.  

What can really help ease these challenges is, of course, stronger medium-term growth.  The UK authorities have undertaken a number of growth enhancing reforms and have retained the positive role played by trade in an open economy.  And it is not by chance that UK is now number four export nation.  They are also rightly stressing the need to do more to lift UK growth closer to 2 percent, in line with U.S. growth and in line with what UK has achieved in the past. 

We offer a number of recommendations and I want to highlight three.  First, ease planning restrictions to make housing more affordable, ease labor mobility and encourage business investment.  Appropriate incentives and support to local councils will be key, and in our Article IV discussions, we went into some details on how that could be done.  Second, help workers gain new skills.  The UK has a larger gap than some of its peers, particularly in high skill growth sectors, like digital, advanced manufacturing, life sciences and construction, where the UK sees the path to higher productivity, higher growth.  We support what the government is doing in this regard and we have come up with some suggestions what more they can do.  And last, health outcomes.  Long-term illness and an aging population are starting to weigh on labor supply. 

I want to recognize the Chancellor for the long-term workforce plan.  We have made some additional recommendations on the capital investments that would well complement this workforce plan.  And also, we believe that at a time when high productivity, high growth are so critical, we are in a world economy that has been in a positive growth trajectory, but with a fairly slow growth.  We think that an independent growth commission, similar to the Climate Change Commission, can help the UK set up a course to reinforce growth prospects.

 Needless to say, UK is a global financial center.  What happens here matters to the rest of the world.  And in that sense, we welcomed UK's pioneering initiatives to better assess and mitigate risk stemming from non-bank financial institutions, such as the system wide exploratory scenario exercise and designing a backstop lending facility for non-bank financial institutions to make sure that we protect the financial stability from all sides.  This is good for the UK.  In our view, this is a global public good.  Very good for the world as a whole. 

So, to sum it up, UK is in a good place.  Growth is picking up, inflation is moderating, medium-term growth enhancing reforms are being put in place, but global uncertainty remains high.  We just simply don't know where the next big shock may originate from.  So, making sure that the fiscal position continues to strengthen and that economic challenges are addressed with perseverance and also flexibility when tough choices need to be made.  That remains as important today as it has been over the last year. 

So, we are open for your questions and look forward to be working with the UK authorities in the future.  Oh, my goodness, there are so many hands in the air.

KOZACK: So what we will do -- so thank you very much, first, Kristalina. I'd also like to take the opportunity to introduce Ali Abbas, our Mission Chief for the UK.  My name is Julie Kozack.  I'm the Director of Communications.  I'll be moderating the Q&A session.  I will call on you.  Please give your name and affiliation, and please limit yourself to one question so we can get to as many of you as possible.  All right, let's start here in the front, at the end. 

QUESTIONER:  Thanks.  Managing Director, you talked about the need for careful calibration of tax and spending choices.  That seems to be putting it quite politely.  What the IMF projections show is a debt-to-GDP ratio for the Bank of England of 97 percent by the end of the forecast period, compared with the OBR's 93 percent.  And you, in this report, are setting out a really wide range of quite tough tax changes to capital gains, inheritance and that sort of thing, as well as the need to rein in public spending quite dramatically.  Do you sense in the UK a debate in the public arena about the kind of fiscal consolidation and the tough measures you were acquiring, or suggesting, I should say, or do you think there's a certain amount of fiscal fiction still going on in the UK?  Thank you.

GEORGIEVA: Let me start by saying that the UK has done quite a lot to bring fiscal discipline to a point that we can project debt to continue to be in, kind of, low risk territory in any scenario that we are putting forward. And also, a very important point that what these choices project is a situation in which there are no gains in productivity and growth that can ease the pressure.  We certainly place a lot of attention to growth enhancing strategies.  When it comes to tax policy, we want to see tax policy that is pro-growth.  When it comes down to spending, we want to see spending that is pro-growth.  And I can say in the years ahead, this is a medium-term projection, we could be -- the UK could be on a productivity growth trajectory that makes these choices easier.  Of course, if this doesn't happen, then we are recommending specific measures, and tough choices made across these measures will deliver the growth -- sorry, the debt trajectory -- that would be beneficial for the UK.

KOZACK: Let's maybe go to the back. Woman in black.

QUESTIONER:  Hello.  You also mentioned in the concluding statement that if the Chancellor had asked you, you probably wouldn't have recommended the two cuts to national insurance.  There's a likelihood that the Chancellor might be considering another one, given that you've had a chat and he's sitting here today.  Would you repeat that advice?  And what would be the consequences of going ahead with another national insurance cut for the public finances and this onus on consolidation, which you've also stressed in the statement?

GEORGIEVA: When we discuss this point, there are considerations that go in a direction of what would most help growth in the UK. The Chancellor and his team are on the view that actions that increased labor supply are necessary to deliver the growth outcome that is more positive -- going to the previous question -- that would make these tough choices slightly less tough.  And so we respect that view of the Chancellor. 

On our side, 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.  Why are we saying that?  For a very simple reason.  We do not -- in a world of more uncertainty, we do not know when there may be, again, a call on governments to have to spend, to borrow more, to spend more. 

Let's remember where we're coming from.  We had a prolonged period of very low interest rates, down to negative interest rates.  What happened in this period?  Governments, companies, households, borrowed.  They accumulated debt with a low interest rate.  Very bearable until it wasn't.  So then we were hit by two consecutive shocks.  Interest rate jumped.  And that reminded us that we have to be -- we have to put an extra attention to fiscal prudence.

KOZACK: Let's go right here.

QUESTIONER:  The message I get is nuanced and it's respectful, present company accepted, which is all very important.  I suppose I'm wondering what our viewers will make of this and some of the sort of opinions you're expressing.  Can you just answer this question?  How likely is it that the party that forms the next government after the election will have to raise taxes?

GEORGIEVA: So the -- who is in power is your choice. And whichever party wins the elections will be operating in this environment of higher uncertainty globally, of lower growth globally, lower productivity, lower growth, and of pressure to find pathways to lift up productivity, lift up growth.  Why?  Because if this doesn't happen, your viewers in a slow growth environment would find it much more difficult to see their standard of living improving.  And we know when this doesn't happen, what people do, they're on the street.  So in any circumstance, policies that are incentivizing work and promoting higher productivity will be necessary.  Any circumstance. 

QUESTIONER:  Tax rises?  How likely?

GEORGIEVA: This you need to -- again, when we talk about taxes, we always advocate for tax that is pro-growth. Not anti-growth.  So if there would be a necessity to look into the balance between spending and taxes carefully, we will be here to say this, good,  this may not be so good, from that perspective. And here is the man who would do it.

KOZACK: Let's go to woman in the middle here in the green jacket.

QUESTIONER:  Hi.  Just to get back to the earlier point, you do seem to be highlighting a dilemma or a tension here between the public services that we have, our tax burden, and our expectations for tax and public services.  Given that the tax burden and public -- the spending on public services has gone up since the Pandemic, are we becoming more like France in terms of public spending on public services and tax rises rather than the U.S., which the Chancellor always seems to aspire towards?

GEORGIEVA: I should be asking you this question. Are you becoming more like France?  So let me give you my reaction to that.  The UK has traditionally been an economy relying more on entrepreneurship, innovation, and a financial system that supports investment and jobs in a more open manner.  That is what you do.  And I think that it has served the UK over decades reasonably well. 

There is a decision around how much you spend, but there is also a decision around what you spent for.  What is the efficiency, what do you get for this money?  I think this is -- this is the same on the tax side.  What you tax, why you tax, what is the policy impact of your taxation?  And I think the choices are not just about how high are taxes and how much is the public spending, but what is the quality of public spending.  And in our engagement this time around, last time, we spend a lot of time thinking about ways in which the UK can learn from other countries to make best use of its public money. 

You look at, for example, productivity growth.  It is so related to skills, and there is still more to be done to inject in skills, both from the state but from the government, but also from companies, to improve the UK's position.  So don't get fixated on is this level or that level, but what do we get for this money.  And in this sense, you're doing, the UK's focus on efficiency of spending is quite right.

KOZACK: Let's go to the gentlemen here. Third row at the very end.

QUESTIONER:  Hi.  Just switching the focus slightly to monetary policy.  It was interesting in the report that you said the Bank of England should probably switch to having press conferences after each meeting.  Do you think that the Bank of England needs to communicate better as well as more often?  I think this is, in the context of monetary policy in Europe, going one way and the opposite way, perhaps, in the United States.

GEORGIEVA: We have discussed this with, as you would expect, we discussed it with Bank of England. They have received the recommendations from the Bernanke report.  They also have received this recommendation from our team.  They would look into it very carefully as they assess the overall package of recommendations.  And I believe in a world of more transparency for the sake of trust in institutions, getting that kind of more regular engagement would help.  That's why we are making that recommendation.

KOZACK: Right here in the front.

QUESTIONER:  Thank you.  You mentioned openness and trade in your opening remarks.  I wonder, obviously, you'll have seen the news about the U.S. imposing tariffs on Chines electric vehicles, solar panels, big tariffs.  I want to first of all, can you just give your response to that?  But also, relatedly, what should the UK do?  Should it be following suit?  Should it be stepping back from doing those kinds of tariffs here?

GEORGIEVA: We have seen a legitimate concern about reliance on supply chains. It came because of COVID and then it came again after Russia started its invasion of Ukraine.  It actually got amplified by that.  And we understand that we are in a world in which security of supplies is going to matter.  It's going to be part of decision making.  It would lead to some shifts in policy, vis-a-vis what we had before.  At the same time, we would like to see high justification of actions in that regard for a simple reason.  A more integrated world economy delivers better for everyone.  And in a world where we are still concerned about inflation, anything that creates more cost pressures has to be taken with great deal of care.  Much better for countries to resolve their trade differences, working together, discussing them, and finding a pathway that would minimize the likely impact in terms of others following suit. 

We did review industrial policy measures over the last years.  Here is the outcome.  2,500 industrial policy measures.  Most -- actually, nearly half -- of these measures come from three places:  the U.S., China, European Union.  For only one third of them, we can find a genuine reason because of market failure.  What is our concern?  One is that if there is no clear reason, if there is no market failure, this may be counterproductive for our objective to lift up productivity and growth and beat down inflation.  And second reason is me too.  When one measure, one country takes a measure, history tells us 75 percent probability reciprocity.  There would be reciprocity to this measure.  And we, as an institution that cares about the health of the world economy, the more we rationally act -- recognizing they would be concerned about security of supplies -- that's real.  But the more we can do a careful job that does not bring unnecessarily higher cost to the world, the better.  

And in that sense, what UK is doing, in our view, is right.  The UK is taking some industrial policy steps because it wants to see itself as the leading force in advanced technologies.  But it is doing it with instruments that, in our view, are appropriate, like the capital investment allowance.  I think I mentioned it in my opening, it is a way to insentivize action like measures taken to build more skills in areas of comparative advantage or interest, to be comparative advantage.  But at the same time, having an economy that exports and does that as successfully as you do now, it's a good thing for everybody here. 

So that is where we are.  It is -- it is -- bottom line here, the world has changed.  We are not going to go back to where we were.  And frankly, there is one serious good reason.  When we were in the old world of globalization, they were winners and the world as a whole did very well, but they were also losers.  And not enough attention has been paid to those who lost, lost their jobs, lost their prospects, and we cannot go back to that world.

KOZACK: Here in the front. Right here.

QUESTIONER:  Hi.  I just want to clarify.  You mentioned the 75 basis three cuts this year.  Is that additional to the 100 basis points four cuts?  Is that seven cuts in total over the next two years?  Is -- that's my understanding.  Is that correct?

ABBAS: That is correct. Our recommendation is for 50 to 75 basis point cuts this year.  Plus we project -- and also this is our recommendation, of 100 basis points cuts, additional to this, in 2025.

QUESTIONER:  Okay, great.  But my question is about G7 this week.  Obviously, a big proposal on the table as regards Russian assets.  Clearly some central bankers and some financiers are concerned about a balancing act and a potential kind of unknown -- unknown risks to financial stability from any sense of seizing property rights and sovereign property rights.  You're the global watchdog for financial stability.  We've got a giant financial center.  Are you concerned about that risk?

GEORGIEVA: It is -- let me -- let me make two points. First, it is a matter to jurisdictions that take this decision to agree on what exactly they will and will not do.  It's not a matter for the Fund.  It's not our job.  You're right -- and this is the second part of my answer -- we would like this decision to be taken very carefully, considering all the possible impacts, both the desired objective as well as what could the law of unintended consequences bring.  And then after very careful consideration, take that decision.  And I want to say that my impression is that that's exactly how it is being approached.  Very careful deliberations, so we do not take a decision that brings benefits on one count, but maybe a source of risks on another balance debt.

KOZACK: Okay, now let's go here, front row.

QUESTIONER:  You make a whole series of recommendations for how taxes could be raised and spending might be cut, I mean, including abolishing the pension, triple lock, carbon pricing, road pricing, extending VAT.  Have you got a preference there for which of these many unpleasant measures would be -- would be palatable to a future government or are you indifferent to --

GEORGIEVA: My preference, very strongly, is higher productivity, stronger growth. That's my preference.  I think --

QUESTIONER:  You outlined a range of measures. 

GEORGIEVA: I know, but you're asking me about my preference. So let me tell you.  My preference is for the UK economy, and for that matter, for the world economy, to grow above the meager, around 3 percent for the world that we see and 1.5 percent for the UK.  That's my preference.  And this is why we put a lot of attention on measures, including how you move on taxes and spending, that can have a pro-growth impact. 

In terms of the choices to be made, as you can imagine, in the end, it is a balancing act for the government.  And all we can do is to say, look, these are your choices.  And when you look at these choices, we think that among those more pro-growth are those, are these.  Higher quality of spending that may help you to achieve your objectives, are those.  But then it is for the government to choose.  I do believe that the UK, being a country highly vulnerable to the risks of climate change, is right to be looking into fiscal measures that are aligned with its green climate policy objectives.  But again, there is a range of options, and this is why we are saying, here it is.  See what is best for you and also what is most acceptable by people.  Because, in the end, policies are for people.

KOZACK: Okay, let's go in the back. To the woman in the kind of tan jacket.

GEORGIEVA: And I'm sorry. Let me check.  Do you have preferences?  You should ask him.  He's the Mission Chief.

ABBAS: I guess one thing I would say is that when it comes to raising taxes, measures that increase marginal tax rates will hit incentives to make profits or to work, whereas measures that broaden the tax base would raise revenue without that adverse impact. So any reforms -- and we do suggest broadening the base of certain taxes.  And in this context, the non-dom reform that was recently done was an important measure.  So that's one principle.  The other is carbon taxation, which has a clear link to the net zero targets and the green transition that the government wants to achieve.  And that would be a tax that would be consistent with that objective.

GEORGIEVA: And also, in addition to that, the more you equalize with everybody else, the less trouble there would be in terms of border adjustment.

QUESTIONER:  Hi.  There's a long list of suggested changes to Britain's fiscal framework, including reducing the number of fiscal events, kind of strengthening the debt rule.  To what extent is it that the policies themselves that have led to, kind of, this low, long-term growth outlook and the strains on investment versus chopping and changing of policies, or the pressure to produce new measures to meet these frequent fiscal events?

GEORGIEVA: I'm going to turn to our Mission Chief to answer this. This is in his alley.

ABBAS: No, I guess, the fiscal rules discussion, or the fiscal institutional framework discussion, highlights some areas where we think the UK is different from, say, other economies in that it has semi-annual fiscal events which do create -- which can create pressures for fiscal loosening in difficult environments. And so one of our suggestions is to consider a single budget a year rather than two semi-annual events.  But there are other proposals there also, which is to have a rolling four to five year expenditure framework which provides clarity and more certainty on what the spending path would be, which is not currently possible with the three year fixed spending ceiling system that Britain has. 

And finally, we are proposing that the horizon for projections that the OBR has for the economic and fiscal outlooks be extended from five years to ten years.  This is consistent with developments in Europe, and our own debt sustainability framework, because that horizon enables you to capture some of these spending trends better, but also to capture the benefits of policies for growth, both on the tax side and on the spend side, to be captured in that horizon.  Thanks.

KOZACK: Okay, we have time for two more questions, so I'm going to go here in the middle. Well, I'll take the three.  One, two and three, and then we're going to wrap up.

QUESTIONER:  Yes.  Hi.  There's almost a throwaway line in the release.  We talk about a shock to UK sovereign risk, which cannot be ruled out.  And you also mentioned QT and talked about the Chancellor's reforms to pension funds, and both of those measures could reduce the number of gilt buyers there are in the market.  I just wondered if you think that the UK is particularly exposed to a potential sovereign risk shock, as we had.

GEORGIEVA: Well, the broad answer is no.  We don't think that the UK is in a particularly vulnerable position, and the detailed answer is in Ali's alley.

ABBAS: So I guess on the pensions, a reform issue, we have not seen the impact of, say, either the reforms to get pension funds investing more in higher-return assets or the broader migration of DB schemes into the insurance sector as having put pressure on gilt yields.  So there is not that concern that some had earlier.  So in that space, actually, we would think that our level of concern has attenuated relative to what it was before.  It's more of a longer term issue that needs to be taken into account.  Thanks.

KOZACK: Okay, so we have right here, and then final question over here.

QUESTIONER:  Hi.  You talk about leaving the UK to decide how it addresses the fiscal issues that you highlight, but you're also -- you’re also effectively saying you don't believe the departmental spending plans and that they need to be 2 percent higher than the government set out.  Aren't you -- aren’t effectively putting the weight onto tax increases then when you talk about the 1 percent of the fiscal balance that needs to be achieved?

GEORGIEVA: I mean, I -- let me start by saying that we are talking about medium-term projection. And my understanding is we are talking about the percentage point that is necessary to make sure that the government reaches debt stabilization objective.  That is what we are talking about.  So we talk about a period of time in which different measures can be put in place. 

And again, I am sorry to be so pressing on this point.  What we do that is the way to go.  What we want to see is high productivity, higher growth.  If this is not the organizing principle of government policy, then indeed tough choices will have to be made.

ABBAS: Maybe I could briefly speak to the 2 percent.  The current spending ceiling extends only to FY 24-25.  And beyond that, the government has an umbrella commitment or an umbrella policy of a certain level of increase, 1 percent increase, in real deal spending and a flat capital spend.  We have done some bottom-up analysis on the spending pressures and needs that partly reflect the government's own announced policy aspirations but also targets related to net zero.  And we have come to the conclusion that that spending path would be slightly higher than what is projected by the OBR, and that's what the 2 percent real increase is.  Thanks.

KOZACK: Okay, final question.

QUESTIONER:  Yeah, thank you.   Why is economic inactivity so much worse than the UK?  Why are we higher than other countries?

GEORGIEVA: So what we see in the UK gets into some of the focus of recommendations we come with.  We see the health balance not being quite right, people staying out of work for health reasons, including mental health reasons.  We see the adjustment of the labor market to both structural changes in the economy, demand coming from areas that are great for the future, but we don't have quite yet the skills for those areas, and they don't get produced overnight.  We also see that there has been a slight decline in performance in the UK on some of the key indicators that our team has been digesting and analyzing.  

So, as you would -- as you saw in our main recommendations for growth, we do emphasize two of the three are about that.  One is about skills and the other one is about health.  And we think that measures that are put in place to improve the comprehensively the quality of health service.  So you don't look at individual pieces of the system, you look at system as a whole, these measures can help.  The government has a plan in that regard.  And we have some additional recommendations. 

And, you know, frankly, we are in a world where human capital is turning into the critical factor for productivity and growth.  More attention from early childhood development, all the way to how people get reskilled.  How you get them to move from where they were, but the job is gone, to where the jobs have appeared.  This is becoming a pressing issue everywhere.  It's not a UK phenomenon, but in UK, there are specificities how this phenomenon can be addressed.  Ali?

ABBAS: Maybe just briefly to add, just to note that the UK's inactivity rate is below that of other G7 peers.  So people do work more in the UK than they do generally in other countries.  But the inactivity rate has picked up in recent years, and that could reflect, you know, one of three factors or more.  The first is there has been pressure on the -- in the health sector, and those pressures could have been affecting health outcomes.  That could be one.  There is also the Pandemic piece and its impact on perhaps mental health and other issues, which, you know, not just the UK but others are also disentangling.  And the third is maintaining adequate incentives for people to work.  So the interaction between the disabilities piece and the benefit system and the government is alert to these challenges, and there are important reforms in progress in these areas.

GEORGIEVA: So, to sum it up, it is health mismatch. Illnesses that need more attention may have not been attended enough and the system may not be delivering.  Skills mismatched.  Jobs are appearing, disappearing, appearing.  Bridges have to be built, and then incentives.  How you get people to go to work.  I mean, we all, globally, we are still wrestling to understand also the overall impact of the Pandemic on labor force dynamics.  The Pandemic eroded social capital everywhere.  How this is going to be rebuilt, I think, we are all wrestling with this question.  So you're not alone in the UK with the problems you face.

KOZACK: Well, thank you very much.  That brings us to the end of this press conference.  I'd like to thank the Managing Director and Ali Abbas, our Mission Chief for the UK.  I also would like to thank the Chancellor and his team for hosting us here today.  Should you have any further questions, please reach out to my colleagues at media@imf.org. And we will be posting the transcript of this press briefing online.  And with that, thank you.

GEORGIEVA: And we don’t forget people are stressed out. They have literally pandemic.  Give them some good news when we have it.  Here it is.  We are delivering a little bit of good news for the UK.  Thank you very much, everybody.