IMF increases pressure on UK

The International Monetary Fund has stepped up pressure on British Chancellor George Osborne to consider easing his austerity programme.

David Lipton, the Fund’s first deputy managing director, said the “pace of consolidation” should be reconsidered given the weakness of the UK economy.

It is a fresh blow for Mr Osborne, who yesterday saw a second ratings agency strip the UK of its prized AAA status.

Fitch placed the UK on an AA+ rating, following Moody’s downgrade of UK debt in February, saying the move reflected a “weaker economic and fiscal outlook”.

Earlier this week the International Monetary Fund cut the UK’s growth forecast growth from 1% to 0.7% this year and 2014’s projection from 1.9% to 1.5%, noting the recovery was “progressing slowly”.

In an interview with Sky News, Mr Lipton said: “The Fund’s view is clear: the UK economy has turned out to be somewhat weaker than had been foreseen, so our view is that the pace of consolidation ought to be reconsidered, and we’ll want to come and have some discussions over that.”

Mr Lipton stressed it was still “very important” that the UK Government maintained fiscal consolidation as a goal.

But he added: “The question now is whether the pace is right or too ambitious given the weakness of the economy.

“The key to us, the bottom line to us, is that they may want to consider adjusting the pace of consolidation.”

He said the subject would be discussed with the UK during the “Article IV consultation” – the annual health check on the economy.