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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Sacked Hilary Benn rules out standing for leadership but tells others "do the right thing"

Hilary Benn was sacked from Jeremy Corbyn's Shadow Cabinet overnight.

Hours after being sacked from Labour's Shadow Cabinet, Hilary Benn popped up again to issue a not-so-coded call for revolution. 

Despite being tipped as a potential rival to Jeremy Corbyn in the past, Benn downplayed his own ambitions and ruled himself out of standing for leader.

But while he described his decision to speak out as a personal one, he made it clear others who felt similarly should speak out.

Benn told Andrew Marr: "I have been a member of the lab party for 45 years. I've devoted my personal and political life to it, and if things are not working I think we have a wider responsiboility to the party that we love to speak out.

"Lots of people will say this isn't an ideal time. There's never an ideal time. I thought it was important to speak out."

Describing Corbyn as a "good and decent man", Benn said he was not a leader and agreed he should consider resigning: "I no longer have confidence in him and I think the right thing to do would be for him to take that decision."

He added: "I am not going to be a candidate for the leader of the Labour party. I haven't taken this decision because I want to. I have taken the decision becauuse I think it's the right thing to do for the Labour party."

As Benn was speaking, rumours of a Shadow Cabinet revolt was mounting, with Labour's last Scottish MP Ian Murray among those expected to resign.

But while there's no doubt Benn has the support of many of his fellow MPs, more than 169,000 ordinary members of the public have signed a petition urging support for Corbyn after Brexit. If there is a parliamentary coup, it's going to be bloody.