International Monetary Fund has cut its forecast for UK growth by 0.3% and urged Chancellor George Osborne to rethink “fiscal adjustment”
(Pictured: protesters at TUC’s “A Future That works” protest. London, Oct 2012)
The IMF’s chief economist Olivier Blanchard singled out the UK as a country that needed to adopt a less aggressive approach to deficit reduction.
The Fund is now forecasting the economy to expand by 0.7% this year and by 1.5% in 2014 – 0.3% less than its previous half-yearly forecast.
And the IMF forecast was not the only piece of bad news for the Chancellor.
Figures released yesterday showed CPI inflation remaining stubbornly above government targets at 2.8%.
UNISON general secretary Dave Prentis said: “Strong inflation, which is expected to rise again this year, means misery for family budgets.
“It is being driven by rising prices for basics such as food and fuel, the very things the low paid spend a large proportion of their money on.
“Pay freezes and squeezes mean that wages are not keeping pace – no wonder many families face the ‘heat-or-eat’ dilemma.
“Local government workers – who have faced three years of frozen pay – need a decent, no strings offer from their employers.
“Since the coalition came to power, inflation, coupled with a prolonged pay freeze even for the lowest paid, has stripped the value of their wages down by 13%. Giving these workers a decent rise would have a knock on effect of boosting our beleaguered economy.”
The IMF’s warning came ahead of the release later today of official unemployment figures, which it is feared could show a spike in the number of jobless people and a further rise in the numbers of people who are regarded as under-employed and of those who are working part-time but are seeking a full-time job.
Last month’s figures put the UK unemployment rate at 2.52m, or 7.8%.
UNISON has estimated that 446 jobs have been lost across the UK from local authorities and police forces alone every day since the Coalition came to power in May 2010.
Critics believe that government economic policies which promised to re-balance the economy by “soaking up” public sector redundancies in newly-created private sector jobs have instead created a growing pool of 100,000s of under-employed people, working in part-time and low-wage jobs.
TUC general secretary Frances O’Grady said: “Three years ago the Chancellor boasted that the IMF was fully behind his economic plans, but now it has downgraded UK growth by more than other advanced economy due to lacklustre demand.
“The Chancellor should listen to the IMF and reverse course by investing for growth and jobs.
“This would not only get the economy moving again but would also bring down the deficit more quickly in the medium term.”
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