World economy grows again but risks remain, warns IMF

Director urges caution as OECD data shows GDP of 30 nations rose 0.8 per cent in Q3

The world's leading economies have returned to positive growth for the first time since the spring of last year. The Organisation for Economic Co-operation and Development, which comprises the 30 most-developed nations, said their combined growth rate for the third quarter of this year was 0.8 per cent – compared with zero growth between April and June.

The news came as Prime Minister Gordon Brown and Dominique Strauss-Kahn, the managing director of the International Monetary Fund, warned UK business leaders that governments should not withdraw economic stimulus packages too soon.

Addressing the Confederation of British Industry's annual conference in London yesterday, Mr Strauss-Kahn said: "The economy remains very much in a holding pattern: stable and getting better but still highly vulnerable ... It is difficult to claim that the crisis is over when unemployment is at historic highs and getting higher still."

The Prime Minister insisted that his government would maintain its economic stimuli, saying: "Choking off recovery by turning off the life support for our economies prematurely would be fatal to British jobs, British growth and British prosperity for years.

"So that's why we will continue with our current plans to support our economy until the private sector recovery is established, and we will ensure that nothing we do will jeopardise that recovery."

However, Charles Goodhart, a senior economic consultant to Morgan Stanley and a former Bank of England policymaker, said the Bank should consider withdrawing its programme of quantitative easing, which injects money directly into the economy.

"It would seem to us unwise for central banks to be injecting much more liquidity into the system given the scale of equity market rallies and sizeable currency moves," he said. "Now is a time when central bankers can pat themselves on the back for a job well done, but they should also recognise that there can too much of what has been a good policy. Perhaps on this front it is time to declare victory, and prepare to withdraw."

Mr Brown also told the CBI: "If we are to have balanced and sustained growth that will keep unemployment low, we will have to address together – and my chosen vehicle is the G20 – a strategy for global growth, addressing global imbalances in trade and currencies, addressing the inefficient use of reserves, the instability in oil prices, and agree together the contribution to higher growth that each continent can make together."

According to the OECD's figures, all the developed nations – with the exception of France – registered an accelerating growth rate or, in the case of the UK, a reduced rate of contraction. India and China, which are growing faster than the established economies, are not OECD members. Mr Strauss-Kahn was more direct in his message to Beijing, saying: "If we are to have sustained global growth, somebody else needs to step in. China and other emerging Asian economies are shifting from exports to domestic demand but they have some way to go."

Turning to Britain's budget deficit, which is believed to be approaching £200bn, Mr Brown said: "People need certainty. They need to know if there is a stable path of deficit reduction they can see will take place."

The Conservative leader David Cameron, meanwhile, called the deficit "the greatest single risk to sustained economic recovery ... Even the risk of tipping back into recession".

Mr Cameron said that if the Tories were returned to government, the Bank of England would be given more power.

"[It] should be put back in charge of two vital things: one is the overall level of debt in the economy, being able to call time on debt in the economy," he said. "And secondly, to put the macro-prudential regulation of banks and financial services back in the Bank of England ... makes sense."

Start your day with The Independent, sign up for daily news emails
Arts and Entertainment
Lou Reed distorted the truth about his upbringing, and since his death in 2013, biographers and memoirists have added to the myths
musicThe truth about Lou Reed's upbringing beyond the biographers' and memoirists' myths
Ed Miliband received a warm welcome in Chester
election 2015
Life and Style
Apple CEO Tim Cook announces the Apple Watch during an Apple special even
fashionIs the Apple Watch for you? Well, it depends if you want for the fitness tech, or the style
ebooksA special investigation by Andy McSmith
  • Get to the point
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

SThree: Trainee Recruitment Consultant

£20000 - £25000 per annum + OTE £45,000: SThree: SThree Group have been well e...

Ashdown Group: IT Manager / Development Manager - NW London - £58k + 15% bonus

£50000 - £667000 per annum + excellent benefits : Ashdown Group: IT Manager / ...

Recruitment Genius: Sales Consultant / Telemarketer - OTE £20,000

£13000 - £20000 per annum: Recruitment Genius: Scotland's leading life insuran...

Ashdown Group: Training Programme Manager - City, London

£40000 - £45000 per annum + benefits : Ashdown Group: Training Programme Manag...

Day In a Page

NHS struggling to monitor the safety and efficacy of its services outsourced to private providers

Who's monitoring the outsourced NHS services?

A report finds that private firms are not being properly assessed for their quality of care
Zac Goldsmith: 'I'll trigger a by-election over Heathrow'

Zac Goldsmith: 'I'll trigger a by-election over Heathrow'

The Tory MP said he did not want to stand again unless his party's manifesto ruled out a third runway. But he's doing so. Watch this space
How do Greek voters feel about Syriza's backtracking on its anti-austerity pledge?

How do Greeks feel about Syriza?

Five voters from different backgrounds tell us what they expect from Syriza's charismatic leader Alexis Tsipras
From Iraq to Libya and Syria: The wars that come back to haunt us

The wars that come back to haunt us

David Cameron should not escape blame for his role in conflicts that are still raging, argues Patrick Cockburn
Sam Baker and Lauren Laverne: Too busy to surf? Head to The Pool

Too busy to surf? Head to The Pool

A new website is trying to declutter the internet to help busy women. Holly Williams meets the founders
Heston Blumenthal to cook up a spice odyssey for British astronaut manning the International Space Station

UK's Major Tum to blast off on a spice odyssey

Nothing but the best for British astronaut as chef Heston Blumenthal cooks up his rations
John Harrison's 'longitude' clock sets new record - 300 years on

‘Longitude’ clock sets new record - 300 years on

Greenwich horologists celebrate as it keeps to within a second of real time over a 100-day test
Fears in the US of being outgunned in the vital propaganda wars by Russia, China - and even Isis - have prompted a rethink on overseas broadcasters

Let the propaganda wars begin - again

'Accurate, objective, comprehensive': that was Voice of America's creed, but now its masters want it to promote US policy, reports Rupert Cornwell
Why Japan's incredible long-distance runners will never win the London Marathon

Japan's incredible long-distance runners

Every year, Japanese long-distance runners post some of the world's fastest times – yet, come next weekend, not a single elite competitor from the country will be at the London Marathon
Why does Tom Drury remain the greatest writer you've never heard of?

Tom Drury: The quiet American

His debut was considered one of the finest novels of the past 50 years, and he is every bit the equal of his contemporaries, Jonathan Franzen, Dave Eggers and David Foster Wallace
You should judge a person by how they peel a potato

You should judge a person by how they peel a potato

Dave Hax's domestic tips are reminiscent of George Orwell's tea routine. The world might need revolution, but we like to sweat the small stuff, says DJ Taylor
Beige is back: The drab car colours of the 1970s are proving popular again

Beige to the future

Flares and flounce are back on catwalks but a revival in ’70s car paintjobs was a stack-heeled step too far – until now
Bill Granger recipes: Our chef's dishes highlight the delicate essence of fresh cheeses

Bill Granger cooks with fresh cheeses

More delicate on the palate, milder, fresh cheeses can also be kinder to the waistline
Aston Villa vs Liverpool: 'This FA Cup run has been wonderful,' says veteran Shay Given

Shay Given: 'This FA Cup run has been wonderful'

The Villa keeper has been overlooked for a long time and has unhappy memories of the national stadium – but he is savouring his chance to play at Wembley
Timeless drama of Championship race in league of its own - Michael Calvin

Michael Calvin's Last Word

Timeless drama of Championship race in league of its own