Tuesday, May 22, 2012

The IMF on getting Britain growing

It has been quite interesting to compare what the International Monetary Fund (IMF) has said about Britain's performance with the headlines in the way it has been reported.

The IMF report said that the UK had made "substantial progress" towards achieving a more sustainable budgetary position and reducing fiscal risks. Pointing to what it called the "global importance" of the UK's financial centre, the report praised policies that have helped to build up capital "buffers" at banks, and the strengthening of regulation within the UK.

IMF head Christine Lagarde gave a strong endorsement to the coalition government's actions: She said that

"The gain that resulted from the fiscal consolidation that was decided two years ago has been that result, the credibility of the UK government and its ability to borrow at extremely favourable rates.

"Sometimes you feel like you could look back and wonder 'what if?'. And when I think back myself to May 2010, when the UK deficit was at 11% and I try to imagine what the situation would be like today if no such fiscal consolidation programme had been decided... I shiver."

The Chancellor, George Osborne, welcomed the IMF's findings, saying

"The IMF couldn't be clearer today. Britain has to deal with its debts and the government's fiscal policy is the appropriate one and an essential part of our road to recovery."

He added that the IMG agree that, in their words 'reducing the high structural deficit remains essential' and make clear in their statement that they consider the current pace of fiscal consolidation to be appropriate."

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