IMF pressures eases Osborne’s task
By politics.co.uk staff
A warning from the International Monetary Fund (IMF) against “delayed or half-hearted” steps to deal with public spending is likely to make George Osborne’s task of winning over Brits to his spending cut agenda easier.
The IMF’s annual review of euro area policies came in the light of the recent sovereign crisis in which Greece narrowly avoided financial collapse.
It recognised that the immediate response had been “bold” but argued individual countries needed to do more to “establish fiscal sustainability”.
“Delayed or half-hearted fiscal consolidation in countries facing high spreads could trigger a further loss of financial market confidence in the fiscal sustainability of some member states, a spike in risk premiums and a sharp depreciation of the euro,” the IMF’s statement read.
“While the recently established crisis management framework should limit abrupt movements, lack of sustained fiscal and structural policy adjustment would further sap business confidence, possibly undoing the impetus stemming from the global recovery and even adversely affecting the global economy.”
Britain is not a member of the euro but the relevance of the IMF’s message is only slightly diminished. London was forced to step in to help when Greece needed urgent assistance last month.
