Economy long way from recovery?

Chancellor George Osborne has to face the fact that the UK economy is still a long way from “a strong and sustainable recovery”, the International Monetary Fund (IMF) has warned.

In its concluding statement on its mission to the UK, the IMF said austerity measures were acting as a drag on the economy. It said the government could do more to offset the negative impact of austerity with infrastructure spending.

“It would be, in our view, useful for the economy for infrastructure and other measures to be brought forward to reduce the drag of austerity measures... and provide more support for the economy," said IMF deputy managing director David Lipton.

The IMF’s recommendations did not involve the government spending more over the medium term as they were "fiscally neutral”.

This was Osborne’s bad news, his good news was that the Bank of England thinks the economy will perform better than expected earlier in the year.

Economic growth this year is now expected to be greater than 1%, up from the Bank’s previous estimate of 0.9%. “The economy is likely to see a modest and sustained recovery over the next three years,” the Bank said, though it added that the recovery would “remain weak by historical standards”.

www.bbc.co.uk/news/business-22623519

www.bankofengland.co.uk/publications/Pages/inflationreport/2013/ir1302.aspx