George Osborne – the UK Chancellor of the Exchequer – has won the support of the International Monetary Fund (IMF), as well as key British economy
and industry powers to press ahead with cuts and not to slow his deficit reduction plan. After the shadow Chancellor Ed Balls had called for a change in economic approach, criticising the government’s economic growth as lethargic and inability to prevent more job losses, the IMF felt compelled to support the head of the Treasury in the current plans of economic spending.
The report states ‘The weakness in economic growth and rise in inflation over the last several months was unexpected. This raises the question whether it is time to adjust macroeconomic policies. The answer is no as the deviations are largely temporary.’ As can be seen, there is clear support shown towards Osborne; urging the Chancellor to maintain his and the coalition’s current strategy.
The government cuts have already had a strong effect on the mortgage industry and the mortgage broker industry in recent months, with the axing of the government’s ‘Mortgage rescue scheme’ in 2010, as well as the obvious and clear fall in consumer spending and lack of consumer confidence within the housing market. Further cuts are likely to continue to affect consumer confidence within the economy, as standard of living levels and individual’s ability to purchase continues to decrease
In recent weeks, revised figures have shown that the economy at current levels is likely to grow at around 1.5% a year over the next years before rising once more to levels of 2.5% in the medium to long term. Were these figures to be true, once more IMF support has been won. In the UK’s annual economic report, the IMF have claimed that the government and Bank of England will have indeed got economic policies right if growth rates stay at expected levels, referring to current policy as ‘appropriate’ considering the circumstances.
However, it was not all praise for the government’s economic policies. Unemployment levels remain consistently and according to the IMF, ‘unacceptably’ high. Furthermore, the IMF warned that tax cuts may be necessary to continue to kick-start the UK economy, whilst the government has been urged to press ahead with public sector pension reform and an increase in the retirement age in the economy.