Jeremy Warner: There's a thing: We've won the IMF's praise

Outlook Even the International Monetary Fund, it seems, now concedes Britain is getting at least something right in its management of the economy. There was faint praise in an IMF report card issued yesterday for Britain's handling of the banking and economic crisis, not that this is likely to help Prime Minister Gordon Brown very much in his quest to get re-elected.

Despite its more positive tone, the IMF refuses to alter its dire forecasts for growth this year and next, while it is still as critical as ever of the Government's plans for reducing the fiscal deficit. Yet the fact remains that, despite the country's exposure to the international banking crisis, and regardless of its overblown housing and credit markets, Britain may end up emerging from the downturn in better shape than most other G7 nations. The recession in Britain is shaping up to be shallower and shorter than elsewhere.

For evidence of this, look no further than the shocking 4 per cent fall in fourth-quarter gross domestic product announced in Japan yesterday, similar to the 3.8 per cent reduction reported by Germany last week. The the developed world's big exporting nations have been hit much harder by the downturn than the profligate deficit nations of Britain and the US.

As it turns out, they were as much beneficiaries of the credit boom as the free-spending Anglo-Saxons. Now that we have stopped spending, there is no one to buy their cars, washing machines, electronic gadgetry and so on. Europe seems particularly ill-equipped to deal with the fallout, with periphery countries such as Ireland in danger of defaulting because they cannot print their own currency to bail themselves out.

Practical and ideological obstacles also limit Europe's ability to embrace the quantitative easing now successfully being applied in Britain and America. Bank deposits in the eurozone are said to be shrinking at the rate of 1 per cent per month as credit is paid down or written off – a position not so dissimilar to what happened in America during the Great Depression. If the Continent sinks into such an economic funk, then even Britain will struggle to recover.