IMF supports UK cutbacks

The International Monetary Fund has
said Britain’s economy is “on the mend” as it backed budget
tightening measures taken by the coalition Government.

In its annual health check of the
UK economy, the IMF said a recovery was underway, unemployment had stabilised
and the health of the financial sector had improved.

And the financial institution said
that while state spending cuts may dampen short-term growth, they would not
stop it.

“The government’s strong and
credible multi-year fiscal deficit reduction plan is essential to ensure debt
sustainability,” the IMF said.

“The plan greatly reduces the
risk of a costly loss of confidence in public finances and supports a balanced
recovery.”

Despite an improving picture, the
UK should expect only a moderate pace of improvement, the IMF warned.

It predicted economic growth of 2
per cent in 2011, although this was lower than its previous estimate of 2.1 per
cent.

The rate of inflation was meanwhile
likely fall back to its 2 per cent target by early 2012, the IMF said.

The endorsement of the Government’s
plans to tackle the UK’s creaking public finances comes less than a month
before the Chancellor sets out his comprehensive spending review.

A spokesman for the Treasury said:
“Last year the IMF said Government borrowing was a risk to the recovery.

“This year the IMF’s verdict
is that the economy is on the mend and that the Government’s deficit reduction
plan is essential and will ensure the sustainability of the public finances,
tackling the highest deficit in the G7.”

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