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Osborne prepared to “aggressively” defend his policies with IMF

Plan A criticism anticipated.

The British Chancellor of Exchequer George Osborne is all set to aggressively defend his policies with an IMF team that will reach London next month to make an annual assessment of the UK economy, reported the Financial Times citing people close to Osborne.

In addition, the chancellor is also prepared to challenge the team’s recommendations if necessary.

Osborne, however, fears that the team will offer a propaganda tool to the opposition Labour party and formally request him to liberalise his fiscal plans. The chancellor believes that key IMF officials want to criticise his Plan A.

As part of its twice-yearly World Economic Outlook, the IMF said that Osborne should consider greater flexibility in his deficit reduction.

The chancellor believes that Keynesian IMF officials Olivier Blanchard and David Lipton are winning the internal argument at the IMF.

IMF economists admit they may need to watch out for poisoned umbrellas for their so-called Article IV mission to London. One aide to Osborne told FT: “If they recommend we loosen fiscal policy, we won’t do it. We think they are wrong.”

Osborne believes that Britain’s 1 per cent fiscal contraction in 2013 is in line with IMF’s general recommendations for advanced economies. He argues that the UK’s 2013 fiscal squeeze will be less harsh than that being implemented in the US.

Shadow chancellor Ed Balls said: “Next week’s growth figures will need to decisively show that a strong and sustained recovery is finally underway or the chancellor will be in real trouble.”

Mark Carney, the incoming governor of the Bank of England, made it clear he did not believe fiscal austerity was a major constraint on the bank’s ability to stabilise the economy.

Carney said that central banks could not deliver long-term growth. “That needs to come from true fiscal adjustment and fundamental structural reforms.” He added: “Central banks take fiscal policy as given and Treasuries take monetary policy as given – that’s the separation. I’m not going to wade in [on fiscal policy] positively or negatively ... except in the most extreme circumstances when growth threatens financial stability.”

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The strange death of boozy Britain: why are young people drinking less?

Ditching alcohol for work.

Whenever horrific tales of the drunken escapades of the youth are reported, one photo reliably gets wheeled out: "bench girl", a young woman lying passed out on a public bench above bottles of booze in Bristol. The image is in urgent need of updating: it is now a decade old. Britain has spent that time moving away from booze.

Individual alcohol consumption in Britain has declined sharply. In 2013, the average person over 15 consumed 9.4 litres of alcohol, 19 per cent less than 2004. As with drugs, the decline in use among the young is particularly notable: the proportion of young adults who are teetotal increased by 40 per cent between 2005 and 2013. But decreased drinking is not only apparent among the young fogeys: 80 per cent of adults are making some effort to drink less, according to a new study by consumer trends agency Future Foundation. No wonder that half of all nightclubs have closed in the last decade. Pubs are also closing down: there are 13 per cent fewer pubs in the UK than in 2002. 

People are too busy vying to get ahead at work to indulge in drinking. A combination of the recession, globalisation and technology has combined to make the work of work more competitive than ever: bad news for alcohol companies. “The cost-benefit analysis for people of going out and getting hammered starts to go out of favour,” says Will Seymour of Future Foundation.

Vincent Dignan is the founder of Magnific, a company that helps tech start-ups. He identifies ditching regular boozing as a turning point in his career. “I noticed a trend of other entrepreneurs drinking three, four or five times a week at different events, while their companies went nowhere,” he says. “I realised I couldn't be just another British guy getting pissed and being mildly hungover while trying to scale a website to a million visitors a month. I feel I have a very slight edge on everyone else. While they're sleeping in, I'm working.” Dignan now only drinks occasionally; he went three months without having a drop of alcohol earlier in the year.

But the decline in booze consumption isn’t only about people becoming more work-driven. There have never been more alternate ways to be entertained than resorting to the bottle. The rise of digital TV, BBC iPlayer and Netflix means most people means that most people have almost limitless choice about what to watch.

Some social lives have also partly migrated online. In many ways this is an unfortunate development, but one upshot has been to reduce alcohol intake. “You don’t need to drink to hang out online,” says Dr James Nicholls, the author of The Politics of Alcohol who now works for Alcohol Concern. 

The sheer cost of boozing also puts people off. Although minimum pricing on booze has not been introduced, a series of taxes have made alcohol more expensive, while a ban on below-cost selling was introduced last year. Across the 28 countries of the EU, only Ireland has higher alcohol and tobacco prices than the UK today; in 1998 prices in the UK were only the fourth most expensive in the EU.

Immigration has also contributed to weaning Britain off booze. The decrease in alcohol consumption “is linked partly to demographic trends: the fall is largest in areas with greater ethnic diversity,” Nicholls says. A third of adults in London, where 37 per cent of the population is foreign born, do not drink alcohol at all, easily the highest of any region in Britain.

The alcohol industry is nothing if not resilient. “By lobbying for lower duty rates, ramping up their marketing and developing new products the big producers are doing their best to make sure the last ten years turn out to be a blip rather than a long term change in culture,” Nicholls says.

But whatever alcohol companies do to fight back against the declining popularity of booze, deep changes in British culture have made booze less attractive. Forget the horrific tales of drunken escapades from Magaluf to the Bullingdon Club. The real story is of the strange death of boozy Britain. 

Tim Wigmore is a contributing writer to the New Statesman and the author of Second XI: Cricket In Its Outposts.