Show Hide image

IMF raises growth forecast for UK

The fund reduces its global growth forecast due to a slowdown in emerging economies.

The International Monetary Fund (IMF) has raised its growth forecast for the UK economy from 0.7 per cent to 0.9 per cent in 2013.

The Fund also lowered its 2013 forecast for the global economic growth to 3.1 per cent due to a slowdown in the economies of emerging countries and European markets. Further, global economic growth rate for next year was reduced to 3.8 per cent.

Olivier Blanchard, chief economist at the IMF, was quoted by Reuters as saying: “After years of strong growth, the BRICS are beginning to run into speed bumps. And while growth in emerging countries has slowed, inflation has not fallen with it, suggesting the economies are already growing close to their potential.”

The Fund warned that the US government's monetary stimulus policy may stop the flow of funds to developing nations, and termed slowdown in the Chinese economy as a threat for global economic growth.

IMF said it had underestimated the recession levels in Europe, and had not considered the US to proceed with cuts in spending.

“Risks of a longer growth slowdown in emerging market economies have now increased due to protracted effects of domestic capacity constraints, slowing credit growth, and weak external conditions,” the Fund said.

The Fund cut down its 2013 growth forecast for emerging markets to 5 per cent and said that the eurozone will continue to be in recession this year, with activity contracting by over 0.5 per cent.

Getty Images.
Show Hide image

Is anyone prepared to solve the NHS funding crisis?

As long as the political taboo on raising taxes endures, the service will be in financial peril. 

It has long been clear that the NHS is in financial ill-health. But today's figures, conveniently delayed until after the Conservative conference, are still stunningly bad. The service ran a deficit of £930m between April and June (greater than the £820m recorded for the whole of the 2014/15 financial year) and is on course for a shortfall of at least £2bn this year - its worst position for a generation. 

Though often described as having been shielded from austerity, owing to its ring-fenced budget, the NHS is enduring the toughest spending settlement in its history. Since 1950, health spending has grown at an average annual rate of 4 per cent, but over the last parliament it rose by just 0.5 per cent. An ageing population, rising treatment costs and the social care crisis all mean that the NHS has to run merely to stand still. The Tories have pledged to provide £10bn more for the service but this still leaves £20bn of efficiency savings required. 

Speculation is now turning to whether George Osborne will provide an emergency injection of funds in the Autumn Statement on 25 November. But the long-term question is whether anyone is prepared to offer a sustainable solution to the crisis. Health experts argue that only a rise in general taxation (income tax, VAT, national insurance), patient charges or a hypothecated "health tax" will secure the future of a universal, high-quality service. But the political taboo against increasing taxes on all but the richest means no politician has ventured into this territory. Shadow health secretary Heidi Alexander has today called for the government to "find money urgently to get through the coming winter months". But the bigger question is whether, under Jeremy Corbyn, Labour is prepared to go beyond sticking-plaster solutions. 

George Eaton is political editor of the New Statesman.