IMF advises UK to ease austerity measures

http://www.guardian.co.uk/politics/2013/jan/24/imf-advises-uk-ease-austerity

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Britain should tone down its austerity plans to help the struggling economy, the International Monetary Fund's chief economist has suggested.

Olivier Blanchard said the budget in March would be a good time for George Osborne to "take stock" of his plan A.

The comments, in an interview with BBC Radio 4's Today programme, came after the IMF trimmed its forecasts for the UK and global growth. The British economy is now expected to expand by 1% rather than 1.1% this year, and 1.9% rather than 2.2% next year.

There are fears that official GDP figures for the final quarter of last year, due to be published on Friday, could show a contraction, adding to pressure on the chancellor to ease his approach.

Blanchard said it was clear the world was "not out of the woods yet".

"We've never been passionate about austerity. From the beginning we have always emphasised that fiscal consolidation should be slow and steady," he said.

"We said that if things look bad at the beginning of 2013 – which they do – then there should be a reassessment of fiscal policy. We still believe that. You have a budget coming in March and we think that would be a good time to take stock and make some adjustments."

He added: "We think that slower fiscal consolidation in some form may well be appropriate."