David Prosser: Gloomy tidings from the IMF
Friday 09 July 2010
Outlook So it's good news and bad from the International Monetary Fund. Its latest projections for the global economy as a whole are a little bit more optimistic than the forecasts it made back in April. Sadly, it is not so upbeat about the UK: its estimates for economic growth in this country have been trimmed.
What lies behind the downgrade of the UK? The IMF does not explicitly say so, but it is pretty clear that the lower growth forecasts reflect its assessment of the impact of last month's emergency Budget. Like the Office of Budget Responsibility, it has lowered its expectations for our economy on the basis that spending cuts will now be larger and come sooner than previously expected.
We saw something similar from the Organisation for Economic Co-operation and Development (OECD) earlier in the week. It warned that the outlook for unemployment in this country was now much bleaker than it had been prior to the Budget – picking up, albeit unwittingly, on the controversy of last week over joblessness.
What's particularly interesting about the latest IMF report is that while cautioning about the risks of further financial turbulence in the eurozone, it seems to regard fiscal tightening as the greater immediate challenge to economic recovery. Not that it is suggesting the tightening planned in the UK and elsewhere is inappropriate – quite the reverse, in fact – but the warning is there nonetheless.
In short, the IMF thinks Europe is broadly in the right place on austerity measures, but that this action will do real damage to its economy. Throw in another round of eurozone crisis, a very real risk it says, and the damage would be really severe. On reflection, more bad news than good then.
- 1 Reader dilemma: 'Our son is 34 with an IQ of 85, and spends all his time in his room. What will happen to him when we're no longer here?'
- 2 Tunisia hotel attack: Locals form 'human shield' to protect hotel from gunman Seifeddine Rezgui
- 3 Russian officials ban yoga because it's too much like a religious cult
- 4 German ethics council calls for incest between siblings to be legalised by Government
- 5 Ginger Pride festival to take place next summer, organisers say 'time of bullying gingers is over'
Tunisia hotel attack: Locals form 'human shield' to protect hotel from gunman Seifeddine Rezgui
German ethics council calls for incest between siblings to be legalised by Government
People are American flagging their Facebook profile pictures in response to those rainbow flagging them
Ginger Pride festival to take place next summer, organisers say 'time of bullying gingers is over'
Historic meeting between Pope Francis and Russian Orthodox head 'getting closer'
The moment a Queen's Guard soldier lost it and drew his gun at annoying tourist
Greece crisis: The wider lesson is that it’s time to abandon this failed experiment in currencies
'I wish the BBC would stop calling it Islamic State' – David Cameron unleashes frustration at broadcaster
Pentagon accuses Russia of 'playing with fire' over nuclear threats towards Nato
Greece crisis: IMF was pushed around by Angela Merkel and Nicholas Sarkozy – and now it is being humiliated
They are neither a 'state' nor 'Islamic': Why we shouldn't call them Isis, Isil or IS
iJobs Money & Business
£20000 - £25000 per annum + OTE £45K: SThree: SThree were established in 1986....
£40000 - £60000 per annum: Recruitment Genius: A Compliance Manager is require...
£22500 - £27000 per annum + OTE £45K: SThree: Since our inception in 1986, STh...
Negotiable: Recruitment Genius: This extremely successful and well-established...