Miffed by the IMF
Posted by admin in on Wed, 29/09/2010 - 08:44
Poor old Ed. No sooner has he won the Labour leadership election than up pops the IMF to declare that George Osborne's got it right over the economy.
In words that will undoubtedly being built into Osborne's conference speech for next week, the IMF said: "The government's strong and credible multi-year fiscal deficit reduction plan is essential to ensure debt sustainability. The plan greatly reduces the risk of a costly loss of confidence in public finances and supports a balanced recovery. Fiscal tightening will dampen short-term growth but not stop it as other sectors of the economy emerge as drivers of recovery, supported by continued monetary stimulus."
That would appear to put Miliband, who's called the coalition's plan 'economically dangerous', in conflict with the IMF, the CBI and the Governor of the Bank of England. Mind you, if brother David really is about to jump ship in favour of a bid for the top job at the IMF, that might build a few bridges there...
But another pronouncement from the IMF also caught our eye this week – a warning that repairs to the global financial sector are far from over. "The process of financial sector repair is unfinished, but successful repair will be critical to opening a path toward the stronger and sustained growth needed to make a meaningful dent in the current high rates of unemployment in many advanced economies,” warned John Lipsky, first deputy managing director at the International Monetary Fund (IMF).
He also warned that while global growth outperformed his expectations in the first half of this year at 7.25 per cent, it was set to slow markedly in the second half of 2010 to 3.75 per cent. This sluggishness will persist into 2011. “While we expect this slowdown to be temporary, the downside risks to advanced economy growth are evident,” he argued.
We're not out of the woods yet.
The Bottom Line:If Mr Cable has his way...
"If Mr Cable had his way, all the big banks would be broken up and bonuses would be virtually eliminated - a sure-fire way in my view of guaranteeing an end to the UK’s ability to compete as an international financial centre. Let’s not forget that this is a man who is on record as saying that everyone who works in a bank has an ‘aristocratic lifestyle’ clearly demonstrating his lack of understanding of the sector." A tough line on bankers’ bonuses could make a brain drain of financial talent a distinct possibility, warns Paul Marsden. Read more
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