It reminds us that if we divert from the course the new government has set out then we really will be heading back into a disastrous period of economic instability for Britain.” The chancellor welcomed the IMF report saying: “They have made it pretty clear that the deficit reduction plan that we have set out is essential for bringing about sustain- ability in our budget. The chancellor will reveal where the cuts will come when he announces the results of the comprehensive spending review on 20 October.
The backing of the IMF will come as a huge vindication of chancellor George Osborne’s proposals to cut public spending by £83bn in order to get the £155bn budget deficit under control.
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In its annual health check of the UK econ- omy the IMF said the recovery was under- way, unemployment had stabilised and the health of the financial sector had improved.Ĭalling the government’s deficit reduc- tion plan “appropriately ambitious” the IMF report said: “The government’s strong and credible multi-year fiscal deficit reduction plan is essential to ensure debt sustainabili- ty.” It added the plan “greatly reduces the risk of a costly loss of confidence in public finances and supports a balanced recovery.”įiscal tightening would dampen short- term growth, said the report, but not stop it as other sectors of the economy emerged as drivers of recovery, supported by continued monetary stimulus. THE International Monetary Fund (IMF) gave its full backing to the coalition govern- ment’s deficit reduction plans yesterday, announcing that the UK economy is on the mend after the longest and deepest reces- sion of the post-war era.
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