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."

PROMOTED VIDEO
News
ebooksAn unforgettable anthology of contemporary reportage
Life and Style
tech

Board creates magnetic field to achieve lift

News
There have been various incidents of social media users inadvertently flouting the law
news

Life and Style
Stack ‘em high?: quantity doesn’t always trump quality, as Friends of the Earth can testify
techThe proliferation of online petitions allows us to register our protests at the touch of a button. But do they change anything?
News
Bourgogne wine maker Laboure-Roi vice president Thibault Garin (L) offers the company's 2013 Beaujolais Nouveau wine to the guest in the wine spa at the Hakone Yunessun spa resort facilities in Hakone town, Kanagawa prefecture, some 100-kilometre west of Tokyo
i100
Sport
CSKA Moscow celebrate after equalising with a late penalty
footballCSKA Moscow 2 Manchester City 2: Premier League champions let two goal lead slip in Russia
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

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

iJobs Job Widget
iJobs Money & Business

Helpdesk Analyst

£23000 per annum + pension and 22 days holiday: Ashdown Group: An established ...

Senior Helpdesk Analyst / Service Desk Co-ordinator

£27000 per annum + pension, 22 days holiday: Ashdown Group: An established ind...

Senior Pensions Administrator

£23000 - £26000 Per Annum: Clearwater People Solutions Ltd: Our client is curr...

Corporate Actions Administrator / Operations Administrator

£25 - 30k: Guru Careers: A Corporate Actions Administrator / Operations Admini...

Day In a Page

Indiana serial killer? Man arrested for murdering teenage prostitute confesses to six other murders - and police fear there could be many more

A new American serial killer?

Police fear man arrested for murder of teen prostitute could be responsible for killing spree dating back 20 years
Sweetie, the fake 10-year-old girl designed to catch online predators, claims her first scalp

Sting to trap paedophiles may not carry weight in UK courts

Computer image of ‘Sweetie’ represented entrapment, experts say
Fukushima nuclear crisis: Evacuees still stuck in cramped emergency housing three years on - and may never return home

Return to Fukushima – a land they will never call home again

Evacuees still stuck in cramped emergency housing three years on from nuclear disaster
Wildlife Photographer of the Year: Intimate image of resting lions claims top prize

Wildlife Photographer of the Year

Intimate image of resting lions claims top prize
Online petitions: Sign here to change the world

Want to change the world? Just sign here

The proliferation of online petitions allows us to register our protests at the touch of a button. But do they change anything?
Ed Sheeran hits back after being labelled too boring to headline festivals

'You need me, I don’t need you'

Ed Sheeran hits back after being labelled too boring to headline festivals
How to Get Away with Murder: Shonda Rhimes reinvents the legal drama

How to Get Away with Murder

Shonda Rhimes reinvents the legal drama
A cup of tea is every worker's right

Hard to swallow

Three hospitals in Leicester have banned their staff from drinking tea and coffee in public areas. Christopher Hirst explains why he thinks that a cuppa is every worker's right
Which animals are nearly extinct?

Which animals are nearly extinct?

Conservationists in Kenya are in mourning after the death of a white northern rhino, which has left the species with a single male. These are the other species on the brink
12 best children's shoes

Perfect for leaf-kicking: 12 best children's shoes

Find footwear perfect to keep kids' feet protected this autumn
Anderlecht vs Arsenal: Gunners' ray of light Aaron Ramsey shines again

Arsenal’s ray of light ready to shine again

Aaron Ramsey’s injury record has prompted a club investigation. For now, the midfielder is just happy to be fit to face Anderlecht in the Champions League
Comment: David Moyes' show of sensitivity thrown back in his face by former Manchester United manager Sir Alex Ferguson

Moyes’ show of sensitivity thrown back in his face... by Ferguson

Manchester United legend tramples on successor who resisted criticising his inheritance
Two super-sized ships have cruised into British waters, but how big can these behemoths get?

Super-sized ships: How big can they get?

Two of the largest vessels in the world cruised into UK waters last week
British doctors on brink of 'cure' for paralysis with spinal cord treatment

British doctors on brink of cure for paralysis

Sufferers can now be offered the possibility of cure thanks to a revolutionary implant of regenerative cells
Ranked seventh in world’s best tourist cities - not London, or Edinburgh, but Salisbury

Lonely Planet’s Best in Travel 2015

UK city beats Vienna, Paris and New York to be ranked seventh in world’s best tourist destinations - but it's not London