The report argued Britain's economy is on the road to recovery, predicting growth of two per cent in 2011, rising to 2.5% in the medium-term, adding that although the regime of spending cuts may slow growth for a time, it is a better long-term strategy for consumer confidence and private sector recovery than any more cautious approach.
All of which knocks on the head all the arguments about "cuts=recession". The IMF, who are more objective than the average Labour politician can see that the total amount of government spending will increase even if some of that spending falls under different headings. Consequently there won't be an Irish style recession, and possibly with a leaner and more efficient public sector as a result of the public sector restraint, productivity might actually improve.The UK economy is on the mend. Economic recovery is underway, unemployment has stabilized, and financial sector health has improved. 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. Upside and downside risks around this central scenario of moderate growth and gradually falling inflation are balanced. Monetary policy will need to be nimble if risks materialize, and fiscal automatic stabilizers should operate freely. Meanwhile, 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.The report concludes: "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."
Good news for Osborne,m but don't expect to hear much about this on the BBC while the Labour/Miliband PR/Lovfest is in full swing.