Rachel Reeves MP, Labour’s Shadow Chief Secretary to the Treasury, responding to today’s IMF World Economic Outlook Report said:
“Today’s report is another blow to George Osborne as the reality of his failed plan hits home. The IMF is absolutely right to caution that ‘Austerity alone cannot treat the economic malaise in the major advanced economies’.
“Today’s forecast is half that of the last full IMF report just last September. At that time the IMF said that if growth were to undershoot this forecast the UK ‘should also consider delaying some of their planned adjustment’.
“Today’s forecasts confirm what has been clear for some time. By raising taxes and cutting spending too far and too fast the Government has hit confidence, squeezed households and choked off the recovery.
“Only anaemic growth is forecast for this year, and since the spending review we have had no growth at all. Today’s forecast for 2012 merely brings the IMF in line with the deeply disappointing OBR forecasts from the March budget of just 0.8% growth this year.
“George Osborne now expects to borrow £150bn more than he planned - the price for higher unemployment and lower tax revenues as a result of his economic mistakes.
“As the chief economist of the IMF says today the immediate priority is to generate demand and growth in European economies - because the alternative is more risky, and will mean a ‘harder fiscal adjustment. George Osborne should take note.”