IMF: Britain should consider "flexibility" in Plan A

"Consideration should be given to greater near-term flexibility in the fiscal adjustment path."

The IMF has cut its forecasts of UK GDP growth in 2013 and 2014 by 0.3 percentage points for each year, to 0.7 and 1.5 per cent respectively. The figure for 2013 is still 0.1pp above the OBR's own forecast for 2013, but where the OBR sees growth picking up rapidly – rising to 1.8 per cent in 2014, and then 2.8 per cent by 2018  the IMF is predicting a slower recovery.

The predictions come from the Fund's World Economic Outlook, its biannual publication looking at the global economic situation. Writing about the UK, the WEO says;

The recovery is progressing slowly, notably in the context of weak external demand and ongoing fiscal consolidation… Domestic rebalancing from the public to the private sector is being held back by deleveraging, tight credit conditions and economic uncertainty, while declining productivity growth and high unit labour costs are holding back much needed external rebalancing…
Consideration should be given to greater near-term flexibility in the fiscal adjustment path.

Merely calling for "consideration" to be given – rather than a demand for immediate "flexibility in the fiscal adjustment path" – provides an out, of sorts, for the Government. Expect to hear the chancellor confirming that he has "considered" the IMF's advice, but decided not to act on it, due to (something). Indeed, the FT cites Treasury sources already spinning the news, claiming the word choice "showed the fund was still sitting on the fence."

But as the Guardian reports, Oliver Blanchard, the Fund's Chief economist, did tell a press conference in the US today that:

The IMF would hold talks with the UK government in the coming months, to "see what can be done" about the pace of deficit reduction.
"In the face of very weak private demand it is time to consider adjustment to the original fiscal plan," Blanchard explained.

The WEO was more positive about the monetary side of the chancellor's record. Although it cautions that the Bank of England may find it hard to unwind the positions it has taken throughout four years of QE, which might force it to face significant trade-offs when it comes to fighting inflation in the future, it also praises the overall strategy of "monetary activism with fiscal responsibility and supply side reform".

That advice goes against the intervention of former MPC member Adam Posen, who today warned of the limits of Mark Carney's potential as Bank of England governor. But it gives Osborne enough cover to struggle on for a while longer.

Photograph: Getty Images

Alex Hern is a technology reporter for the Guardian. He was formerly staff writer at the New Statesman. You should follow Alex on Twitter.

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Despite its Brexit victory, the hate-addicted right rages on – but the left is silent

The Brexit victors aren’t addicted to independence. They’re addicted to hatred.

The weirdest thing about Brexit is how angry the victors are. You would expect the losers to be sore – but open any British newspaper and it’s as if getting what they wanted has rendered the winners yet more snappish. At any time, you can guarantee that the medium least likely to offer principled opposition to any assault on democracy is the British press. Even so, it’s astonishing to open a copy of the Daily Telegraph and find that a byline has become a mere technicality, a breakwater for the eye. Page after page, countless squads of identical bald clones drone on – all chorus, no counterpoint – ranting about the evils of a Europe, which, in theory, they are supposed to have vanquished.

What is the point of having so many writers when they all write the same article? It turns out that it wasn’t Europe they wanted to leave. It was contemporary Britain. They’re not addicted to independence. They’re addicted to hatred.

In the United States, television and newspaper reporters have understood that their president is out to get them. So they are fighting back, challenging him on his lies in a way that the BBC does not dare. Women, African Americans and Latinos have all staged impressive demonstrations to disrupt the idea that the current state of affairs in the US is either necessary or, more important, normal. Republican senators aiming to take away their voters’ rights to health care have been facing impassioned town-hall meetings. There is exhilarating satire on television.

But over here, the 48 per cent of people who feared a loveless future of cringing isolation, austerity and social backwardness have been largely content to take defeat on the chin, as though cowed by the fact that so many of the poorest among us don’t agree.

In Britain, the silence is eerie. We know from experience that it takes time for artists and film-makers to respond to sudden changes of temperature.

Margaret Thatcher was first elected in 1979, but it wasn’t until 1982 that we were enlightened by Alan Bleasdale’s Boys from the Blackstuff; My Beautiful Laundrette didn’t ­arrive until 1985; and it was 1987 before Caryl Churchill gave us Serious Money – a full eight years after Thatcher’s election.

All three works may enjoy an enduring power and authority denied to the collected speeches of Norman Tebbit. They define the era. But they all came too late to do anything more than raise morale. The damage had been done. You may feel that the musical of Billy Elliot nailed Thatcher’s government definitively, but it began to offer its insights 15 years after her resignation.

Politics in the West is in a mess because no one can answer the question of why Western labour should continue to enjoy its relative privileges when labour in the rest of the world can offer to do our work so much more cheaply. The standard answers from left and right are equally unconvincing and polluted by residual imperialist attitudes to race. Conservatives swing wildly. On some days, they behave as if they can continue to enjoy the free movement of capital while planning to forbid the free movement of labour. On others, they pretend that they still believe in the same market that failed so spectacularly ten years ago.

Neither position is coherent, and the mix of the two is crazy. But the left has done little better to explain how social justice can be advanced in the face of an international buffeting that has no care for workers’ rights.

In 2015, Ed Miliband, the then leader of the Labour Party, went into the general election without having decided whether he was or wasn’t going to defend the Keynesian public spending that had saved Britain from the corruption of the banks. The present leader of the Conservative Party, always marching fearlessly behind a thick cladding of popular prejudice, is implementing a European divorce against which she campaigned only a year ago. Small wonder that people have so little hope of Westminster.

Historically, we have always been taught that change comes from below. When people suffer intolerably, they overturn the cause of their suffering. Yet they still need representatives who can articulate their needs. Revulsion has to bubble up soon, but so do policies.

In our daily lives, we all meet people who are thoughtful, kind-hearted, efficient and serious. We encounter such people in medicine, in education, in law enforcement and in social care, and it is their generosity and foresight that make life worth living. Yet Theresa May is content to hug close individuals who would be thrown out of any job but politics. Her Foreign Secretary, Boris Johnson, was sacked by the Times for lying. Her Transport Secretary, Chris Grayling, was accused of trying to interfere with a prison inspection report while he was justice secretary, and he banned sending books to prisoners.

Most inexplicable of all was the elevation of Liam Fox, her International Trade Secretary, who is in permanent disgrace because he has refused fully to admit wrongdoing for overclaiming expenses and using public money to pay a close friend who attended 57 per cent of his Ministry of Defence engagements without security clearance.

Why on earth are such people promoted by a vicar’s daughter who boasts of her moral values? It is in that disparity between who we are and how we are represented that the best hope of opposition lies.

Disbelief will shade into outrage, even if Labour continues to be led by a man blithely indifferent to the practicalities of getting ­anything done. Confronted with the ascen­dancy of scoundrels such as Fox, Grayling and Johnson, anyone, from any part of the UK, will agree with Karl Marx: shame is the only revolutionary emotion.

David Hare is a playwright

This article first appeared in the 30 March 2017 issue of the New Statesman, Wanted: an opposition