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Christine Lagarde warns UK growth 'not good' | |
(about 7 hours later) | |
The head of the International Monetary Fund (IMF), Christine Lagarde, has expressed renewed concern over the health of the UK economy. | |
The UK's growth numbers are "not particularly good", Ms Lagarde said. | The UK's growth numbers are "not particularly good", Ms Lagarde said. |
But speaking ahead of a high-level meeting of policymakers in Washington, she refused to be drawn on whether UK should reassess its austerity policy. | |
Her comments came as Mark Carney, the next governor of the Bank of England, hinted at his concerns over the UK. | Her comments came as Mark Carney, the next governor of the Bank of England, hinted at his concerns over the UK. |
In an interview ahead of the meeting between the IMF and the World Bank, he said the US recovery was leaving behind "crisis economies" that included the UK, the eurozone, and Japan. | In an interview ahead of the meeting between the IMF and the World Bank, he said the US recovery was leaving behind "crisis economies" that included the UK, the eurozone, and Japan. |
Mr Carney has been reluctant to comment directly on the UK ahead of taking the helm of its central bank in July. | |
But he appeared to back Chancellor George Osborne's view that austerity measures were important to promoting growth. | |
"[Central banks] can provide the conditions for growth... but they can't deliver the long-term growth," he said. "That needs to come from true fiscal adjustment and fundamental structural reforms." | "[Central banks] can provide the conditions for growth... but they can't deliver the long-term growth," he said. "That needs to come from true fiscal adjustment and fundamental structural reforms." |
Consider adjustment? | |
Earlier this week, the IMF's chief economist, Olivier Blanchard, urged the UK to rethink its austerity policy in the face of continuing weakness in the economy. | Earlier this week, the IMF's chief economist, Olivier Blanchard, urged the UK to rethink its austerity policy in the face of continuing weakness in the economy. |
But speaking to reporters on Thursday, Ms Lagarde refused to go as far. | But speaking to reporters on Thursday, Ms Lagarde refused to go as far. |
"We clearly support the [austerity] policy," she said. "[But] we've also said that, should growth be particularly low, then there should be consideration to adjusting by way of slowing the pace [of austerity]. | "We clearly support the [austerity] policy," she said. "[But] we've also said that, should growth be particularly low, then there should be consideration to adjusting by way of slowing the pace [of austerity]. |
"Looking at numbers... the growth numbers are certainly not particularly good." | "Looking at numbers... the growth numbers are certainly not particularly good." |
The IMF is due to arrive in the UK in May to conduct a thorough investigation of the UK's economy as part of its "Article IV" consultations. | |
The consultations are made annually, and allow the IMF to monitor member countries and issue recommendations about economic policy. | |
Ms Lagarde said she did not wish to pre-empt those consultations by giving a view on UK economic policy now. | |
So far, the IMF has supported Mr Osborne's policy of cuts to spending in order to reduce the budget deficit. | |
But in recent months there have been growing questions over whether austerity measures are doing more harm than good, not least due to weak economic numbers. | |
Since cuts were introduced in 2010, the UK's economic growth has consistently been below official forecasts, and borrowing has not been significantly reduced. | |
Earlier this week, the IMF cut its growth forecast for the UK. It now expects the economy to grow by just 0.7% this year, down from its January forecast of 1% growth. | |
However, Mr Osborne has insisted that the only way to ensure long term economic growth in the UK was to first bring down the deficit. |
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