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."

News
Russia Today’s new UK channel began broadcasting yesterday. Discussions so far have included why Britons see Russia as ‘the bad guy’
news

New UK station Russia Today gives a very bizarre view of Britain

News
people
Voices
Left: An illustration of the original Jim Crowe, played by TD Rice Right: A Couple dressed as Ray and Janay Rice
voices

By performing as African Americans or Indians, white people get to play act a kind of 'imaginary liberation', writes Michael Mark Cohen

Arts and Entertainment
Keira Knightley and Benedict Cumberbatch at the premiere of The Imitation Game at the BFI London Film Festival
filmsKeira Knightley tried to miss The Imitation Game premiere to watch Bake Off
PROMOTED VIDEO
Have you tried new the Independent Digital Edition apps?
News
ebooksAn unforgettable anthology of contemporary reportage
News
i100
Life and Style
fashion
Arts and Entertainment
Hand out press photograph/film still from the movie Mad Max Fury Road (Downloaded from the Warner Bro's media site/Jasin Boland/© 2014 Warner Bros. Entertainment Inc.)
films'You have to try everything and it’s all a process of elimination, but ultimately you find your path'
Arts and Entertainment
Imelda Staunton as Dolores Umbridge in the Harry Potter films
books

New essay by JK Rowling went live on Pottermore site this morning

News
people

Top Gear presenter is no stranger to foot-in-mouth controversy

News
i100
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

Humanities Teacher - Greater Manchester

£22800 - £33600 per annum: Randstad Education Manchester Secondary: The JobAt ...

Design Technology Teacher

£22800 - £33600 per annum: Randstad Education Manchester Secondary: Calling al...

Foundation Teacher

£100 - £125 per day: Randstad Education Chelmsford: EYFS Teachers - East Essex...

English Teacher- Manchester

£19200 - £33600 per annum: Randstad Education Manchester Secondary: Are you a ...

Day In a Page

The drugs revolution starts now as MPs agree its high time for change

The drugs revolution starts now as MPs agree its high time for change

Commons debate highlights growing cross-party consensus on softening UK drugs legislation, unchanged for 43 years
The camera is turned on tabloid editors in Richard Peppiatt's 'One Rogue Reporter'

Gotcha! The camera is turned on tabloid editors

Hugh Grant says Richard Peppiatt's 'One Rogue Reporter' documentary will highlight issues raised by Leveson
Fall of the Berlin Wall: It was thanks to Mikhail Gorbachev that this symbol of division fell

Fall of the Berlin Wall

It was thanks to Gorbachev that this symbol of division fell
Halloween 2014: What makes Ouija boards, demon dolls, and evil clowns so frightening?

What makes ouija boards and demon dolls scary?

Ouija boards, demon dolls, evil children and clowns are all classic tropes of horror, and this year’s Halloween releases feature them all. What makes them so frightening, decade after decade?
A safari in modern Britain: Rose Rouse reveals how her four-year tour of Harlesden taught her as much about the UK as it did about NW10

Rose Rouse's safari in modern Britain

Rouse decided to walk and talk with as many different people as possible in her neighbourhood of Harlesden and her experiences have been published in a new book
Welcome to my world of no smell and odd tastes: How a bike accident left one woman living with unwanted food mash-ups

'My world of no smell and odd tastes'

A head injury from a bicycle accident had the surprising effect of robbing Nell Frizzell of two of her senses

Matt Parker is proud of his square roots

The "stand-up mathematician" is using comedy nights to preach maths to big audiences
Paul Scholes column: Beating Manchester City is vital part of life at Manchester United. This is first major test for Luke Shaw, Angel Di Maria and Radamel Falcao – it’s not a game to lose

Paul Scholes column

Beating City is vital part of life at United. This is first major test for Shaw, Di Maria and Falcao – it’s not a game to lose
Frank Warren: Call me an old git, but I just can't see that there's a place for women’s boxing

Frank Warren column

Call me an old git, but I just can't see that there's a place for women’s boxing
Adrian Heath interview: Former Everton striker prepares his Orlando City side for the MLS - and having Kaka in the dressing room

Adrian Heath's American dream...

Former Everton striker prepares his Orlando City side for the MLS - and having Kaka in the dressing room
Simon Hart: Manchester City will rise again but they need to change their attitude

Manchester City will rise again but they need to change their attitude

Manuel Pellegrini’s side are too good to fail and derby allows them to start again, says Simon Hart
Isis in Syria: A general reveals the lack of communication with the US - and his country's awkward relationship with their allies-by-default

A Syrian general speaks

A senior officer of Bashar al-Assad’s regime talks to Robert Fisk about his army’s brutal struggle with Isis, in a dirty war whose challenges include widespread atrocities
‘A bit of a shock...’ Cambridge economist with Glasgow roots becomes Zambia’s acting President

‘A bit of a shock...’ Economist with Glasgow roots becomes Zambia’s acting President

Guy Scott's predecessor, Michael Sata, died in a London hospital this week after a lengthy illness
Fall of the Berlin Wall: History catches up with Erich Honecker - the East German leader who praised the Iron Curtain and claimed it prevented a Third World War

Fall of the Berlin Wall

History catches up with Erich Honecker - the East German leader who praised the Iron Curtain and claimed it prevented a Third World War
How to turn your mobile phone into easy money

Turn your mobile phone into easy money

There are 90 million unused mobiles in the UK, which would be worth £7bn if we cashed them in, says David Crookes