IMF backs the government's deficit reduction plan

[vesela]

www.ft.com/cms/s/0/224391c4-ca48-11df-a860-00144feab49a.html?ftcamp=rss

"In an unusually positive annual assessment of economic policy, the Fund's team, who have just finished a mission to the UK, found little to fault in economic policy and endorsed the government's planned spending cuts.

"The Fund... praised the government's bold strategy to eliminate the deficit within five years. The deficit reduction plan 'greatly reduces the risk of a costly loss of confidence in fiscal sustainability and will help rebalance the economy,' the concluding statement of the mission said.

Makes it a bit harder for Labour to carry on doing its "they're getting it ALL wrong" act.

ooh look:

"The report warned the government against getting cold feet about reform of banks."

sorry, that was from the Guardian article, not the FT one (didn't link to Guardian because it had picture of Osborne looking a bit pasty).
"The UK authorities should continue to provide leadership and build support for ambitious global reform of financial regulation. Ensuring a smooth transition to a new supervisory architecture at home will also be important to secure a safer post-crisis environment."

Distinct smell of shot fox in the air....

I'm quite reassured by that IMF report. It has been something of a leap of faith so far for voters, I think, and it's good to see the strategy endorsed - even with the caveats about getting to grips with financial regulation. Big hurdle to overcome when finance is a global business.

I don't really trust the IMF or other supranational bodies - but it's useful nonetheless.

It's yet another indication that the Tories/coalition are now in the mainstream, and Labour are lurching far to the left.

Yes Im sure the plan is fine in terms of international money, but what about everything else? People, for example.

Without money you can't get schools'n'hospitals.

If you need more money than you get in tax, you need to borrow. If you need to borrow then the people you borrow from need to have confidence you are able to pay it back. If they lose that confidence they won't lend to you any more (or will charge exorbitant interest rates).

The choice is to cut in a controlled and measured way now, or cut in a hasty and dangerous way when forced to.

A nice side feature is that the rebalancing of the economy will lead to more private sector jobs, and fewer public sector jobs.

I am reassured that they have emphasised the importance of bank reforms. This is the cause of the recent crisis and we would be fools not to address the problem.

A separate issue is this sentence that "private sector growth" will fill the gaps and unemployment created by the cuts. It has been thrown around by politicians without any evidence backing it up whatsoever.

In fact large areas of the private sector are supported by the public sector - eg building companies, communications/advertising companies, management consultancies (ha!), just a few off the top of my head. Not to mention the retail sector supported by those employed in public sector jobs.

The public sector provides vital services and is a major employer in some areas.

I am concerned that while the deficit needs to be addressed, the changes required have not been balanced in the best interests of the country.