The International Monetary Fund has warned Chancellor George Osborne that he risks damaging the UK economy if he does not slow down the pace of austerity and focus on growth.
Speaking to The Telegraph, the IMF deputy managing director David Lipton said the Chancellor may have to prioritise the UK’s flagging economy instead of imposing cuts.
He said: “Our view has been that doing nothing is not a good answer given the problems that could arise when very, very low growth becomes entrenched,”
Lipton also called on the Bank of England to be more inventive in the way it uses quantitative easing other than buying gilt-edged securities to boost the UK economy.
Last year Osborne extended the £123bn deficit reduction programme by two years to 2017 and Lipton expects the chancellor will be forced to repeat the exercise and lengthen the extension.
Lipton said: “This is a challenge that doesn’t necessarily go away. Going forward there’s a need to keep an eye on this subject.”