The International Monetary Fund (IMF) has cut the UK's growth forecast more than any other major economy and called for the government to spend more to stimulate growth.
The International Monetary Fund (IMF) has cut the UK’s growth forecast more than any other major economy and called for the government to spend more to stimulate growth.
The IMF said that Britain’s economy will grow by just 0.7 per cent this year and by 1.5 per cent in 2014 – a 0.3 percentage point cut for each year. This is greater than for any other leading economy, including Italy and Spain.
The Half-yearly economic report from the IMF said the treasury should consider being flexible about its austerity strategy.
“In the United Kingdom, other forms of monetary easing could be considered, including the purchase of private sector assets and greater transparency on the likely future monetary stance. Greater near-term flexibility in the path of fiscal adjustment should be considered in the light of lacklustre private demand,” the report said.
“Domestic rebalancing from the public to the private sector is being held back by deleveraging, tight credit conditions, and economic uncertainty, while declining productivity growth and high unit labour costs are holding back much-needed external rebalancing,” it added.
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