IMF Backs Government Deficit Reduction Policy

The IMF has come out in support of the Chancellor’s deficit reduction programme, although it did concede that the strategy carried with it significant risks to inflation and unemployment rates, both of which are key drivers of personal insolvency.  It said that whilst weak economic growth and rising inflation was “unexpected”, it believed this would be only temporary.

The organisation went on to say that the Government's policy mix, which has been heavily criticised in some quarters for being too austere, would still deliver its original medium-term economic growth forecast of 2.5%, although its 2011 forecast was revised downward to 1.5% from 1.7% in April.

IMF deputy director John Lipsky said “the current slowdown in our view is temporary and the current policy mix is appropriate.”

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