George Osborne braced for IMF challenge over austerity plans

Critical verdict could leave Chancellor isolated as the global consensus appears to turn against austerity

George Osborne's austerity programme faces a major challenge today when a team from the International Monetary Fund (IMF) arrives in Britain to conduct its annual "health check" on the economy.

Treasury officials will defend the Chancellor's Plan A. But there is growing concern among ministers that the IMF will make its most explicit call for the spending cuts to be slowed at the end of its two-week visit. Mr Osborne would almost certainly reject such a verdict and plough on with Plan A. But, as the global consensus appears to turn against austerity, he might be left looking increasingly isolated.

The Chancellor suffered a setback last night when an analysis by the Trades Union Congress (TUC) found that Britain's recovery is slower than 23 of the 33 advanced economies monitored by the IMF, suggesting the UK is trailing in the "global race" trumpeted by David Cameron. It found that income per head will not return to pre-crash levels until 2017. In contrast, in the United States and Germany, income per head will be more than 10 per cent higher a decade after the financial crisis.

Among the G7 nations, only Italy has a slower recovery that the UK. The TUC said Mr Osborne could no longer blame the country's woes on the eurozone, because the vast majority of its member states are performing better. The IMF's conclusions will be given before its team departs by David Lipton, a former adviser to President Barack Obama who – ominously for the Treasury – is seen as a Keynesian. Until recently, Christine Lagarde, the IMF managing director, has provided valuable cover for the Coalition's cuts. But last month the IMF called for greater flexibility because the economy is still flatlining.

Treasury officials will tell the IMF delegation that the Government has already shown such flexibility by spreading deficit-reduction over a longer period than originally planned. Officials will say the programme is in line with IMF targets and that the IMF should be "consistent" – pointing out that it has not called for a change of course in countries with weaker growth such as France and the Netherlands. The Treasury will argue that the 0.3 per cent growth in the first three months of this year is higher than the IMF predicted.

But Chris Leslie, a Labour Treasury spokesman, said: "George Osborne should not arrogantly dismiss the advice of the IMF team. It's time the Chancellor listened to their warnings that his failing economic policies are playing with fire and that Britain now needs a Plan B for jobs and growth."

He added: "The TUC analysis shows that in the global race David Cameron is so fond of talking about, Britain is falling behind as our competitors move ahead. The slowest recovery for 100 years means living standards are falling, the deficit is not coming down and long-term damage is being done."

Frances O'Grady, the TUC general secretary, said: "The Chancellor's commitment to self-defeating austerity has prolonged people's suffering and put the brakes on our economic recovery – so much so that escaping a triple-recession is considered by some to be a cause for celebration."

A Treasury source said: "This is an own goal by Labour's paymasters. This analysis starts in 2008 and so includes the biggest recession in modern history – which happened under Labour. Clearing up the mess we inherited won't happen overnight."

Start your day with The Independent, sign up for daily news emails
Have you tried new the Independent Digital Edition apps?
ebooks
ebooksAn introduction to the ground rules of British democracy
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
SPONSORED FEATURES
Independent Dating
and  

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

iJobs Job Widget
iJobs General

Recruitment Genius: Sales Executive or Senior Sales Executive - B2B Exhibitions

£18000 - £30000 per annum: Recruitment Genius: A Sales Executive or Senior Sal...

Recruitment Genius: Head of Support Services

£40000 - £55000 per annum: Recruitment Genius: This is an exciting opportunity...

Recruitment Genius: Warehouse Team Leader

£22000 per annum: Recruitment Genius: This industry leading company produces h...

Recruitment Genius: Business Development Manager / Sales - OTE £40,000

£20000 - £40000 per annum: Recruitment Genius: This IT provider for the educat...

Day In a Page

The Silk Roads that trace civilisation: Long before the West rose to power, Asian pathways were connecting peoples and places

The Silk Roads that trace civilisation

Long before the West rose to power, Asian pathways were connecting peoples and places
House of Lords: Outcry as donors, fixers and MPs caught up in expenses scandal are ennobled

The honours that shame Britain

Outcry as donors, fixers and MPs caught up in expenses scandal are ennobled
When it comes to street harassment, we need to talk about race

'When it comes to street harassment, we need to talk about race'

Why are black men living the stereotypes and why are we letting them get away with it?
International Tap Festival: Forget Fred Astaire and Ginger Rogers - this dancing is improvised, spontaneous and rhythmic

International Tap Festival comes to the UK

Forget Fred Astaire and Ginger Rogers - this dancing is improvised, spontaneous and rhythmic
War with Isis: Is Turkey's buffer zone in Syria a matter of self-defence – or just anti-Kurd?

Turkey's buffer zone in Syria: self-defence – or just anti-Kurd?

Ankara accused of exacerbating racial division by allowing Turkmen minority to cross the border
Doris Lessing: Acclaimed novelist was kept under MI5 observation for 18 years, newly released papers show

'A subversive brothel keeper and Communist'

Acclaimed novelist Doris Lessing was kept under MI5 observation for 18 years, newly released papers show
Big Blue Live: BBC's Springwatch offshoot swaps back gardens for California's Monterey Bay

BBC heads to the Californian coast

The Big Blue Live crew is preparing for the first of three episodes on Sunday night, filming from boats, planes and an aquarium studio
Austin Bidwell: The Victorian fraudster who shook the Bank of England with the most daring forgery the world had known

Victorian fraudster who shook the Bank of England

Conman Austin Bidwell. was a heartless cad who carried out the most daring forgery the world had known
Car hacking scandal: Security designed to stop thieves hot-wiring almost every modern motor has been cracked

Car hacking scandal

Security designed to stop thieves hot-wiring almost every modern motor has been cracked
10 best placemats

Take your seat: 10 best placemats

Protect your table and dine in style with a bold new accessory
Ashes 2015: Alastair Cook not the only one to be caught in The Oval mindwarp

Cook not the only one to be caught in The Oval mindwarp

Aussie skipper Michael Clarke was lured into believing that what we witnessed at Edgbaston and Trent Bridge would continue in London, says Kevin Garside
Can Rafael Benitez get the best out of Gareth Bale at Real Madrid?

Can Benitez get the best out of Bale?

Back at the club he watched as a boy, the pressure is on Benitez to find a winning blend from Real's multiple talents. As La Liga begins, Pete Jenson asks if it will be enough to stop Barcelona
Athletics World Championships 2015: Beijing witnesses new stage in the Jessica Ennis-Hill and Katarina Johnson-Thompson heptathlon rivalry

Beijing witnesses new stage in the Jess and Kat rivalry

The last time the two British heptathletes competed, Ennis-Hill was on the way to Olympic gold and Johnson-Thompson was just a promising teenager. But a lot has happened in the following three years
Jeremy Corbyn: Joining a shrewd operator desperate for power as he visits the North East

Jeremy Corbyn interview: A shrewd operator desperate for power

His radical anti-austerity agenda has caught the imagination of the left and politically disaffected and set a staid Labour leadership election alight
Isis executes Palmyra antiquities chief: Defender of ancient city's past was killed for protecting its future

Isis executes Palmyra antiquities chief

Robert Fisk on the defender of the ancient city's past who was killed for protecting its future