The Staggers

The New Statesman’s rolling politics blog

The IMF spoils the coalition's relaunch

Forecast for UK growth is downgraded by more than any other G8 country.

By George Eaton Published 16 July 2012 15:30

Chancellor George Osborne leaves 11 Downing Street. Photograph: Getty Images.

Chancellor George Osborne leaves 11 Downing Street on July 10, 2012 in London. Photograph: Getty Images.

David Cameron is increasingly keen to draw attention to what he calls the coalition's "achievements": cutting the deficit by a quarter, capping benefits, creating hundreds of new academies, reforming public sector pensions and so on. We learned today that the government will shortly publish a "mid-term review" highlighting its "successes". But the IMF has just provided a reminder of one of the coalition's failures: its inability to generate growth.

In its latest World Economic Outlook, the Fund downgraded its forecast for UK growth by more than any other G8 country. It now expects the UK to grow by just 0.2 per cent this year (down from a previous forecast of 0.8 per cent) and by 1.4 per cent next year (down from 2 per cent). The Q2 GDP figures, which will be released this month, will almost certainly show that we remain in recession, a further blow to George Osborne's diminished authority.

But in his defence, Osborne will point out that the IMF has again endorsed his deficit reduction plan. It states that the UK has "appropriately maintained its commitments to balance the structural current budget within five years and to put net debt on a declining path, with additional consolidation in store in 2015–17." Despite previously stating that the UK should enact fiscal stimulus (through "temporary tax cuts and greater infrastructure spending") if activity continues to "undershoot current expectations" (which it has), the IMF appears to have fallen prey to another bout of fiscal hawkery.

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Tags: George Osborne Coalition Spending Cuts

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11 comments

Wed, 2012-07-18 13:32 — Goji (not verified)

Nice article..... interesting.
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Tue, 2012-07-17 09:57 — Mr Bingham (not verified)

Everyone including The Governor of the Bank of England Mervyn King warned before the 2010 general election that the Tories were inexperienced and cannot and should not be trusted with the British economy. Later in 2010 Sorros the world respected financier also said publicly at the World Economic Forum in Europe that David Cameron and George Osborne's deficit reduction and austerity measures were a real danger to the British economic recovery. Also many other leading economist sounded those very same concerns regarding Osborne's plans for the British economy.

The only experience that George Osborne has ever had with anything to do with finances before becoming the Chancellor of The Exchequer is dealing with his very own personal bank account. You would have thought that during a time of mayor economic problems it would have been more competent to have given the job as Chancellor of The Exchequer to someone that had years of experience in the field of economics/finance. What does David Cameron do ? Give the job to his best buddy the economic illiterate George Osborne that is famous for having a job in Selfridge's Department Store as a Towel Folder, yes you heard it : A Towel Folder. It is no wonder that the Governor of The Bank of England Mervyn King was sounding out the message that the Tories cannot and should not be trusted with the British economy. The Tories under David Cameron are chancers and liars that are making things up as they go along.

We cannot say that we was not warned. The Tories are flushing this country down the toilet !

Tue, 2012-07-17 13:33 — Nominal Thickness (not verified)

Whilst at the same time planning the coup in 2010 with the orangefookers and the Tories.

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Tue, 2012-07-17 01:54 — Juliet (not verified)

What do you mean by "the IMF appears to have fallen prey to another bout of fiscal hawkery"? Do you mean it's got another £10B from the British taxpayers? Why are we allowing this to happen in this downturn? We need to get OUR economy growing!