Christine Lagarde warns UK growth ‘not good’

The head of the International Monetary Fund (IMF), Christine Lagarde, has expressed renewed concern over the health of the UK economy.

The UK’s growth numbers are “not particularly good”, Ms Lagarde said.

But speaking ahead of a high-level meeting of policymakers in Washington, she refused to be drawn on whether UK should reassess its austerity policy.

Her comments came as Mark Carney, the next governor of the Bank of England, hinted at his concerns over the UK.

In an interview ahead of the meeting between the IMF and the World Bank, he said the US recovery was leaving behind “crisis economies” that included the UK, the eurozone, and Japan.

Mr Carney has been reluctant to comment directly on the UK ahead of taking the helm of its central bank in July.

But he appeared to back Chancellor George Osborne’s view that austerity measures were important to promoting growth.

“[Central banks] can provide the conditions for growth… but they can’t deliver the long-term growth,” he said. “That needs to come from true fiscal adjustment and fundamental structural reforms.”

Consider adjustment?

Earlier this week, the IMF’s chief economist, Olivier Blanchard, urged the UK to rethink its austerity policy in the face of continuing weakness in the economy.

But speaking to reporters on Thursday, Ms Lagarde refused to go as far.

“We clearly support the [austerity] policy,” she said. “[But] we’ve also said that, should growth be particularly low, then there should be consideration to adjusting by way of slowing the pace [of austerity].

“Looking at numbers… the growth numbers are certainly not particularly good.”

The IMF is due to arrive in the UK in May to conduct a thorough investigation of the UK’s economy as part of its “Article IV” consultations.

The consultations are made annually, and allow the IMF to monitor member countries and issue recommendations about economic policy.

Ms Lagarde said she did not wish to pre-empt those consultations by giving a view on UK economic policy now.

So far, the IMF has supported Mr Osborne’s policy of cuts to spending in order to reduce the budget deficit.

But in recent months there have been growing questions over whether austerity measures are doing more harm than good, not least due to weak economic numbers.

Since cuts were introduced in 2010, the UK’s economic growth has consistently been below official forecasts, and borrowing has not been significantly reduced.

Earlier this week, the IMF cut its growth forecast for the UK. It now expects the economy to grow by just 0.7% this year, down from its January forecast of 1% growth.

However, Mr Osborne has insisted that the only way to ensure long term economic growth in the UK was to first bring down the deficit.

Πηγή: BBC