A bet-hedging sort of report into the UK’s economy from the IMF today, which largely supports George Osborne’s deficit reduction plan, but will also give some encouragement to his detractors. By way of a summary, here are the parts that might satisfy Osborne himself, as well as Vince Cable, Ed Balls and Mervyn King:
The passage that the Chancellor will flash around Westminster
comes on the very second page of the IMF document. “Strong fiscal consolidation is under way,” it reads, “and remains essential to achieve a more sustainable budgetary
position, thus reducing fiscal risks.” And the endorsements for the Chancellor’s deficit reduction plan continue inside, not least in the claims that the public finances were treading a
“clearly unsustainable path” before last year’s Emergency Budget, and that “the overall focus on expenditure reduction appears appropriate, as cyclically adjusted
spending rose by 9 percent of GDP over the last decade.”
As for the wider economic picture, there is a good dose of optimism in the IMF’s forecasts: “[Our] central scenario is that rebalancing occurs and financial sector health continues to improve,” they say.
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