Support 110 years of independent journalism.

  1. Business
  2. Economics
24 January 2012

IMF warns the UK and others: change course now

Coutries with low interest-rates should reconsider the pace of cuts, says the IMF.

By George Eaton

Until recently, George Osborne was fond of boasting that his side had the support of “the IMF, the OECD, the credit rating agencies, the bond markets, the European Commission”. But after seeing the results of austerity in Britain and the eurozone, all of these groups have changed tack.

Here’s the key passage from today’s IMF report:

Those [advanced countries] with very low interest rates or other factors that create adequate fiscal space, including some in the euro area, should reconsider the pace of near-term fiscal consolidation. Overdoing fiscal adjustment in the short term to counter cyclical revenue losses will further undercut activity, diminish popular support for adjustment, and undermine market confidence.

The IMF doesn’t name individual countries but it’s clear that it has the UK, along with the US and Germany, in mind. Britain’s interest rates, partly thanks to the Bank of England buying up hundreds of billions of gilts, are at historic lows, offering Osborne the chance to borrow to stimulate growth and jobs.

Select and enter your email address Your weekly guide to the best writing on ideas, politics, books and culture every Saturday - from the New Statesman. The New Statesman's quick and essential guide to the news and politics of the day. Stay up to date with NS events, subscription offers & updates.
  • Administration / Office
  • Arts and Culture
  • Board Member
  • Business / Corporate Services
  • Client / Customer Services
  • Communications
  • Construction, Works, Engineering
  • Education, Curriculum and Teaching
  • Environment, Conservation and NRM
  • Facility / Grounds Management and Maintenance
  • Finance Management
  • Health - Medical and Nursing Management
  • HR, Training and Organisational Development
  • Information and Communications Technology
  • Information Services, Statistics, Records, Archives
  • Infrastructure Management - Transport, Utilities
  • Legal Officers and Practitioners
  • Librarians and Library Management
  • Management
  • Marketing
  • OH&S, Risk Management
  • Operations Management
  • Planning, Policy, Strategy
  • Printing, Design, Publishing, Web
  • Projects, Programs and Advisors
  • Property, Assets and Fleet Management
  • Public Relations and Media
  • Purchasing and Procurement
  • Quality Management
  • Science and Technical Research and Development
  • Security and Law Enforcement
  • Service Delivery
  • Sport and Recreation
  • Travel, Accommodation, Tourism
  • Wellbeing, Community / Social Services
Visit our privacy Policy for more information about our services, how New Statesman Media Group may use, process and share your personal data, including information on your rights in respect of your personal data and how you can unsubscribe from future marketing communications.

As long ago as October 2009, the NS warned that too great a pace of austerity would be self-defeating. Now, albeit far too late, the IMF agrees. Osborne’s deficit reduction programme has left Britain with slower growth than every EU country except Greece, Cyprus, Portugal, Slovenia and Denmark, and he is set to borrow billions more than Labour planned.

There is no prospect of Osborne changing course, the political cost would be too high, but it is becoming ever harder for him to argue that there is no alternative.

Content from our partners
Why we must prioritise treating long-term health conditions
It’s time to reimagine the lifecycle of our devices
On the road to Cop28