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Four questions answered on the IMF lower global growth forecast

The IMF lowered its estimates for global growth: what does this mean?

In Tokyo last night the international Monetary Fund ahead of the IMF-World Bank 2012 Annual Meetings downgraded its estimates for global growth – but what does this actually mean?

What have the IMF actually said? 

The IMF Chief Economist Oliver Blanchard said: “Low growth and uncertainty in advanced economies are affecting emerging market and developing economies through both trade and financial channels, adding to homegrown weaknesses.”

The IMF also added: "In advanced economies, growth is now too low to make a substantial dent in unemployment."

What does this mean?

It means global growth has stunted and the IMF now predict the global economy to grow by 3.6 per cent instead of 3.9 per cent as previously estimated in July. One of the most significant downgrades was in the UK, where the IMF expects the economy to shrink by 0.4 per cent this year.

What factors have contributed to this new rating? 

Continued economic crises in the Eurozone, which is expected to shrink by 0.7 per cent this year, a credit cycle downturn in Asia and Latin America, slow growth in America and a significant slow down in growth from China.

What is the IMF’s advice for growth?

The IMF has said Europe must stand behind a summit pledge made in June to allow the European Stability Mechanism (bail-out fund) to stabilise struggling banks in Spain and other European Monetary Union (EMU) states. The US, the IMF has said, must increase its debit ceiling and delay automatic spending cuts and tax increases expected next year – otherwise the economy could fall back into recession and have a knock on effect to the rest of the world.

Jorg Decressin, a senior analyst at the IMF, also told Sky News: "The general mix of policy - which is to reduce large fiscal deficit, and to support growth through an accommodative monetary policy and through financial sector reform - is the right way to go.”


Heidi Vella is a features writer for

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Lord Geoffrey Howe dies, age 88

Howe was Margaret Thatcher's longest serving Cabinet minister – and the man credited with precipitating her downfall.

The former Conservative chancellor Lord Howe, a key figure in the Thatcher government, has died of a suspected heart attack, his family has said. He was 88.

Geoffrey Howe was the longest-serving member of Margaret Thatcher's Cabinet, playing a key role in both her government and her downfall. Born in Port Talbot in 1926, he began his career as a lawyer, and was first elected to parliament in 1964, but lost his seat just 18 months later.

Returning as MP for Reigate in the Conservative election victory of 1970, he served in the government of Edward Heath, first as Solicitor General for England & Wales, then as a Minister of State for Trade. When Margaret Thatcher became opposition leader in 1975, she named Howe as her shadow chancellor.

He retained this brief when the party returned to government in 1979. In the controversial budget of 1981, he outlined a radical monetarist programme, abandoning then-mainstream economic thinking by attempting to rapidly tackle the deficit at a time of recession and unemployment. Following the 1983 election, he was appointed as foreign secretary, in which post he negotiated the return of Hong Kong to China.

In 1989, Thatcher demoted Howe to the position of leader of the house and deputy prime minister. And on 1 November 1990, following disagreements over Britain's relationship with Europe, he resigned from the Cabinet altogether. 

Twelve days later, in a powerful speech explaining his resignation, he attacked the prime minister's attitude to Brussels, and called on his former colleagues to "consider their own response to the tragic conflict of loyalties with which I have myself wrestled for perhaps too long".

Labour Chancellor Denis Healey once described an attack from Howe as "like being savaged by a dead sheep" - but his resignation speech is widely credited for triggering the process that led to Thatcher's downfall. Nine days later, her premiership was over.

Howe retired from the Commons in 1992, and was made a life peer as Baron Howe of Aberavon. He later said that his resignation speech "was not intended as a challenge, it was intended as a way of summarising the importance of Europe". 

Nonetheless, he added: "I am sure that, without [Thatcher's] resignation, we would not have won the 1992 election... If there had been a Labour government from 1992 onwards, New Labour would never have been born."

Jonn Elledge is the editor of the New Statesman's sister site CityMetric. He is on Twitter, far too much, as @JonnElledge.