Wednesday, February 24, 2010

International Monetary Fund backs Labour's 'wait-and-see' approach to cutting deficit .

The International Monetary Fund may not know it, but they have backed Gordon Brown's plans to "wait and see" before cutting back on stimulus packages, which goes against the Tory plan to reduce the deficit as soon as possible.

In a rebuff to David Cameron's avowed intention to start repairing the public finances as soon as this spring's election is over, the Washington-based IMF said the fragility of the global economy meant stimulus packages should be left in place well into 2010.

The detailed study – Exiting from Crisis Intervention Policies – was published as data from the British Bankers' Association for January showed a dip in mortgage borrowing, a sharp drop in lending to businesses and a repayment of credit card debt for the 10th successive month.

"In general, fiscal and monetary stimulus may need to be maintained well into 2010 for a majority of the world's economies, including several of the largest, although the timing of the exit is likely to differ substantially across countries," the IMF said. It added that the recovery from the global economy's most severe downturn since the second world war had been stronger in the leading emerging economies such as India and China than it had been in the developed west.

Ever since the economic crisis began, Cameron and Osborne have shown themselves to be clinging to Conservative dogma and apparently completely unaware that that the Thatcherite/Reaganesque crap they were talking was partly what got us into this mess in the first place.

Obama and Gordon Brown both favoured using stimulus packages while Cameron was declaring that the recession should be allowed to take it's course. This was a position which was not emulated even by other right wing government's such as those of Sarkosy and Merkel. Cameron really was out there on his own insisting that the market would self correct, even as the market was threatening to implode in front of our eyes.
Darling said: "The IMF's report is further evidence that David Cameron and George Osborne have neither the experience nor the judgment to be trusted with the economy. The IMF agreed the government's approach is the right one. The report confirms that doing what David Cameron suggests would wreck the recovery."
David Cameron has been enjoying great success in the polls, although I freely admit that it's a success which I do not understand.

The only time he has ever been asked to make a serious call was during the economic crisis and the call he made was simply wrong.

But, even as the IMF report points out how wrong the Conservative approach to this is, they continue to insist that the report vindicates their position.

The shadow chief secretary to the Treasury, Phil Hammond, said: "This report reinforces the view of the Conservatives, the CBI, Sir Richard Branson, the Bank of England, credit rating agencies and 20 leading economists that Gordon Brown must set out a credible plan for reducing the deficit as soon as possible, to put Britain back on her feet."

The IDF actually state the opposite:
"Fiscal and monetary stimulus may need to be maintained well into 2010, although if developments proceed as expected, withdrawal could begin in 2011."
And yet these jokers look as if they might very well enter Number Ten in the summer.

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