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11th of August 2011
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IMF provides assessment for UK economy

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by Kay Mitchell

In its latest assessment of the UK economy, the International Monetary Fund (IMF) has said growth will be around 1.5% this year.

The Washington-based Fund warned that stubbornly high inflation continues to be a threat to the economy and is forecasting inflation to remain well above the 4% mark in 2011 before falling to 2% by the end of 2012 – returning to its target.

Meanwhile, it has supported the Government’s austerity measures as “appropriate” to the current economic conditions but said the Government needs to be prepared to for problems such as falling house prices, which could derail the recovery.

The Fund also suggested that the Bank of England may need to reintroduce its quantitative easing programme – a scheme known as printing money – designed to stimulate growth within the economy.

The report said: “Directors noted that the growth outlook is subject to considerable uncertainties. They agreed that policies may need to adjust in the event of a change in macroeconomic conditions. In particular, if growth and inflation surprise on the upside, monetary tightening would need to accelerate.

“Conversely, mounting evidence that weak demand is likely to cause the economy to stall and enter a period of prolonged low growth would call for looser macroeconomic policies,” it added.

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News posted: August 2, 2011

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