THE DAILY TELEGRAPH: Britain’s recovery has stalled and the Government must be prepared to relax austerity to pump life into the ailing economy, the International Monetary Fund has warned.
The IMF said that post-crisis repair to the ravaged economy would take longer than expected, meaning extra effort to boost growth could take priority over deficit reduction should the outlook worsen.
It said the 2013 Budget would be an ideal time for the Government to consider further action, should policies already in place fail to make an impact.
"If growth does not take off and unemployment fails to recede even after substantial further monetary stimulus and strong credit easing measures have been given time to work, the policy response should include a further slowing of fiscal consolidation," said Ajai Chopra, the IMF’s deputy director of the European department.
"[The Budget] would be the natural time to look at the state of the economy and policy responses," he said. » | Angela Monaghan, Economics Correspondent | Thursday, July 19, 2012
My comment:
Austerity, austerity, austerity is not the answer to a severe recession, depression. What the Chancellor is doing with all this austerity is slamming the breaks on really hard when in actual fact the pump needs to be primed.
Whilst it is always prudent for a country to get its finances in order, the time for doing this is when the going is good. It is when the going is good that we save for that proverbial 'rainy day'. A family doesn't save money when the rainy day has come; rather, it saves for the rainy day when circumstances allow. So it should be for government. The coffers should be being filled when the economy is booming. What this government is doing is turning this wisdom on its head. The result will be misery for the people. Witness what is going on in Greece – austerity as we have, but in extremis.
All this austerity should therefore be tempered by a solid growth strategy. Only when the economy starts to grow again, only when there is at least a modicum of recovery can we hope to shorten the dole queues, can we hope to relieve people's misery, can we hope to encourage people to spend again. For it is only when people spend that demand increases; and only when demand increases will the economy start moving again. – © Mark
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