So – young lads Cameron, Clegg and Osbourne have had their work examined by the big boys (ie: the International Monetary Fund has graded their efforts and patted them on the back). But what the International Monetary Fund (IMF) report entail?
The good news first –
the IMF said that they were pleased with the cuts and efforts made by the coalition government to reduce the deficit. They said that the plan was essential to the recovery of the UK economy, and that it will guarantee that they are able to continue borrowing money in the future. They said the improvement since 2010 was substantial, and that had things continued going the way they had been with a fiscal consolidation program, things would have been very bad indeed.
But the IMF was quick to point out that the economy is still facing extreme pressure from the Eurozone crisis, which has a serious effect on the UK. Growth is being prevented and unemployment remains high, and economic recovery has not yet taken hold, meaning that any improvement will be small and slow at best. Unemployment remains at more than 8%, with a huge number of young people unable to get a job.
So what did the IMF suggest to improve the situation? This was more than just a ‘Well done, shame about the economy' speech, as calls were made on the Bank of England to introduce quantitative easing and cutting Value Added Tax for businesses, to pass on the money to the consumer. These are measures that the Labour opposition has been advocating. This, the IMF believes, would encourage growth and thus improve the job situation to some extent. The IMF even suggested delaying further cuts until the economy picks up, prioritising growth over austerity.
One way or another, it certainly looks as though the cuts were the right route to take. Recovery is still a long way off. But the IMF is confident that Britain is heading in the right direction at least.