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?
News
ebookA unique anthology of reporting and analysis of a crucial period of history
News
peopleMathematician John Nash inspired the film Beautiful Mind
News
Richard Blair is concerned the trenches are falling into disrepair
newsGeorge Orwell's son wants to save war site that inspired book
Life and Style
Audrey Hepburn with Hubert De Givenchy, whose well-cut black tuxedo is a 'timeless look'
fashionIt may be a paradox, but the industry loves it
Arts and Entertainment
The pair in their heyday in 1967
music
Life and Style
fashionFrom bathing dresses in the twenties to modern bikinis
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 General

Guru Careers: Software Developer / C# Developer

£40-50K: Guru Careers: We are seeking an experienced Software / C# Developer w...

Guru Careers: Software Developer

£35 - 40k + Benefits: Guru Careers: We are seeking a Software Developer (JavaS...

SThree: Trainee Recruitment Consultant / Resourcer

£18000 - £23000 per annum + Commission: SThree: As a Trainee Recruitment Consu...

Ashdown Group: UI Developer - (UI, HTML, CSS, JavaScript, AngularJS)

£25000 - £40000 per annum: Ashdown Group: UI Developer - (UI, JavaScript, HTML...

Day In a Page

Abuse - and the hell that came afterwards

Abuse - and the hell that follows

James Rhodes on the extraordinary legal battle to publish his memoir
Why we need a 'tranquility map' of England, according to campaigners

It's oh so quiet!

The case for a 'tranquility map' of England
'Timeless fashion': It may be a paradox, but the industry loves it

'Timeless fashion'

It may be a paradox, but the industry loves it
If the West needs a bridge to the 'moderates' inside Isis, maybe we could have done with Osama bin Laden staying alive after all

Could have done with Osama bin Laden staying alive?

Robert Fisk on the Fountainheads of World Evil in 2011 - and 2015
New exhibition celebrates the evolution of swimwear

Evolution of swimwear

From bathing dresses in the twenties to modern bikinis
Sun, sex and an anthropological study: One British academic's summer of hell in Magaluf

Sun, sex and an anthropological study

One academic’s summer of hell in Magaluf
From Shakespeare to Rising Damp... to Vicious

Frances de la Tour's 50-year triumph

'Rising Damp' brought De la Tour such recognition that she could be forgiven if she'd never been able to move on. But at 70, she continues to flourish - and to beguile
'That Whitsun, I was late getting away...'

Ian McMillan on the Whitsun Weddings

This weekend is Whitsun, and while the festival may no longer resonate, Larkin's best-loved poem, lives on - along with the train journey at the heart of it
Kathryn Williams explores the works and influences of Sylvia Plath in a new light

Songs from the bell jar

Kathryn Williams explores the works and influences of Sylvia Plath
How one man's day in high heels showed him that Cannes must change its 'no flats' policy

One man's day in high heels

...showed him that Cannes must change its 'flats' policy
Is a quiet crusade to reform executive pay bearing fruit?

Is a quiet crusade to reform executive pay bearing fruit?

Dominic Rossi of Fidelity says his pressure on business to control rewards is working. But why aren’t other fund managers helping?
The King David Hotel gives precious work to Palestinians - unless peace talks are on

King David Hotel: Palestinians not included

The King David is special to Jerusalem. Nick Kochan checked in and discovered it has some special arrangements, too
More people moving from Australia to New Zealand than in the other direction for first time in 24 years

End of the Aussie brain drain

More people moving from Australia to New Zealand than in the other direction for first time in 24 years
Meditation is touted as a cure for mental instability but can it actually be bad for you?

Can meditation be bad for you?

Researching a mass murder, Dr Miguel Farias discovered that, far from bringing inner peace, meditation can leave devotees in pieces
Eurovision 2015: Australians will be cheering on their first-ever entrant this Saturday

Australia's first-ever Eurovision entrant

Australia, a nation of kitsch-worshippers, has always loved the Eurovision Song Contest. Maggie Alderson says it'll fit in fine