Ed Balls MP, Labour’s Shadow Chancellor, said in response to the IMF’s World Economic Outlook update:
“The time has now come for David Cameron and George Osborne to realise their economic gamble – cutting spending and raising taxes too far and too fast – has backfired and heed the advice of the independent IMF.
“Last year the IMF was clear that if growth undershot expectations then the British Government should reconsider the pace of spending cuts and tax rises which choked off our recovery well before the recent eurozone crisis, pushed up unemployment and has seen borrowing forecasts soar.
“Now the IMF has slashed their growth forecasts and confirmed that growth in Britain will indeed be much lower than they expected. And they have called on countries with low interest rates, like the UK, to reconsider the speed of their spending cuts and tax rises.
“The Conservative-led Government must now listen to the IMF, change course and finally get a plan for jobs and growth which is vital to get the deficit down. Of course there need to be tough decisions on spending, tax and pay, but trying to go too far and too fast ends up backfiring as George Osborne is now set to borrow £158 billion more than he planned. As even the credit rating agencies have now acknowledged, austerity alone is self-defeating.
“We also need to see real leadership in Europe to take the action necessary to resolve the eurozone crisis. This means restoring market confidence by giving the European Central Bank the political backing to act as lender of last resort and getting a plan for jobs and growth which is essential to tackle deficits.”