Osborne is set to break his golden debt rule

The IMF's warning that Osborne will miss his debt target spells trouble for the Chancellor.

After slashing its forecasts for UK growth earlier this week, the IMF has just delivered its full verdict on the state of the British economy and it makes grim reading for George Osborne. Noting that "the big picture on growth is one of stagnation since late-2010", the Fund repeats its call for Osborne to prepare a plan B if the economy fails to recover.

The planned pace of structural fiscal tightening will need to slow if the recovery fails to take off even after additional monetary stimulus and strong credit easing measures.

And there's more. It expects economy to "grow modestly" but warns that "current policy settings" mean the UK could suffer a "permanent loss of productive capacity".

But worst of all for Osborne, the Fund predicts that he will miss his target for national debt to be falling as a percentage of GDP by 2015-16. The man who mocked Gordon Brown for breaking his "golden rule" is set to do the same. "Under... weaker medium-term growth projections, the net debt target is expected to be met one year late," the IMF says. Government debt is now expected to rise from 78.8 per cent of GDP in 2014-15 to 79.9 per cent in 2015-16.

While Osborne's arbitrary targets are of little economic importance they are of immense political significance. Should he abandon his debt rule, the UK could lose its AAA credit rating. Standard & Poor's, for instance, has previously warned that our top rating is conditional on Osborne meeting his fiscal mandate. But why should we listen to the discredited agenices that rated Lehman Brothers and AIG as "safe investments" days before the crash? The answer is simple: we shouldn't. But this doesn't alter the fact that Osborne did. Having adopted the UK's credit rating as his metric of success (he once boasted that the UK was "the only major western country which has had its credit rating improve") he can hardly change tact now. 

The alternative, of course, is for Osborne to announce billions more in spending cuts and tax rises in a desperate attempt to meet his target. But that would only further reduce growth, meaning that he might miss his target anyway, and would hardly endear him to voters already bruised by austerity. The truth is that for Osborne, who arrogantly dismissed well-intentioned critics as "deficit deniers", there are now no good options.

George Osborne will his target to reduce the national debt, warned the IMF. Photograph: Getty Images.

George Eaton is political editor of the New Statesman.

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Tony Blair won't endorse the Labour leader - Jeremy Corbyn's fans are celebrating

The thrice-elected Prime Minister is no fan of the new Labour leader. 

Labour heavyweights usually support each other - at least in public. But the former Prime Minister Tony Blair couldn't bring himself to do so when asked on Sky News.

He dodged the question of whether the current Labour leader was the best person to lead the country, instead urging voters not to give Theresa May a "blank cheque". 

If this seems shocking, it's worth remembering that Corbyn refused to say whether he would pick "Trotskyism or Blairism" during the Labour leadership campaign. Corbyn was after all behind the Stop the War Coalition, which opposed Blair's decision to join the invasion of Iraq. 

For some Corbyn supporters, it seems that there couldn't be a greater boon than the thrice-elected PM witholding his endorsement in a critical general election. 

Julia Rampen is the digital news editor of the New Statesman (previously editor of The Staggers, The New Statesman's online rolling politics blog). She has also been deputy editor at Mirror Money Online and has worked as a financial journalist for several trade magazines. 

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