IMF warns Britain to support growth

(London) – The International Monetary Fund said Britain may need to further slow the pace of its tough austerity measures to lift the country’s growth amid the risk of a major eurozone “shock”. “Fiscal easing and further use of the government’s balance sheet should be considered if downside risks materialise and the recovery fails to take off,” said the fund’s annual report on Britain.
“If growth does not build momentum, planned fiscal adjustment would need to be reconsidered,” it added. The world’s seventh largest economy slipped back into recession at the end of last year but Prime Minister David Cameron has stood by tough austerity measures, albeit at a slower pace than before.
“Unfortunately economic recovery in the UK has not yet taken hold and stresses abound,” IMF managing director Christine Lagarde told reporters, warning of the risk that low growth could become “entrenched”.
Lagarde said Britain should “use its government budget and the extra favourable financial terms on which it borrows today to support growth.”
But, she said, “I shiver” to think of “what the situation would be now had not fiscal consolidation taken place” after May 2010, when the current Conservative-led coalition took power.