Warning that weak growth was putting the country at risk of permanently high unemployment, the Bretton Woods institution called for swift and co-ordinated action between the Bank and the Treasury.
If the joint efforts had failed to have much effect by November, the Government should then consider cutting taxes and boosting infrastructure spending by as much as £30bn, said the IMF.
In an unusually alarmist annual assessment of the UK, IMF managing director Christine Lagarde said that "growth is too slow and unemployment too high, and policies to bolster demand before low growth becomes entrenched are needed".
However, she stressed that austerity had been the right course for the UK, applauding George Osborne as "courageous" and insisting that fiscal stimulus should only be considered as a last resort.
"When trying to imagine what the situation would be like today if no such fiscal consolidation programme had been decided, I shiver," she said. » | Philip Aldrick, Economics editor | Tuesday, May 22, 2012
