IMF praises UK economy

The International Monetary Fund has praised the UK Economy, which has weathered the storms of increasing oil and gas prices and a falling housing prices remarkably well. The UK economy, which is the forth largest economy in the world, has adequately maintained growth levels and stability.

The report published by the IMF attributes the success of the UK’s economy to the government’s sound economic policies. However, the report criticises some of the Chancellor’s moves to redefine the parameters of the current economic cycle.

While acknowledging that the the Chancellor’s ambition to reduce the budget deficit is a priority, the report questions the feasibility of achieving a further GDP growth of 1.5% without additional revenue.

To add to this, the IMF claims that the Chancellor’s redefinition of the economic cycle will only function as a distraction from the necessary focus on fiscal economic policy.

The distraction centres on the Chancellor’s golden rule which states that government can only borrow to invest over the economic cycle. By redefining the start date and the duration of the current economic cycle, the government can effectively borrow more without breaking the Chancellor’s golden rule.

The final point of note from the IMF is their concern over fiscal policy. Although housing prices appear to have stabilised, and a crash appears to have been avoided, rising energy prices are adding to inflationary pressures.