Mr Cameron in Davos - and bother from the IMF

David Cameron at Davos Is it time for Mr Cameron and his chancellor to think about Plan B?

David Cameron wants to use his keynote address here in Davos today to call for international co-operation to make sure that global companies pay their fair share of tax.

But, the movers and shakers meeting here may be more interested in what he said yesterday about Britain's future in the European Union.

They also want to hear what Mr Cameron and his chancellor - speaking later today - plan to do to add life to Britain's feeble economic recovery.

George Osborne will want to point out that the latest forecasts from the International Monetary Fund show Britain growing faster than the eurozone in both 2013 and 2014.

Setting a date

He will be less happy with comments from the Fund's chief economist, Olivier Blanchard, suggesting that the time is right for the chancellor to reassess his budget plans.

IMF's Olivier Blanchard: There should be reassessment

Mr Osborne has been accustomed to getting solid public support for his economic policies from the IMF, even when the UK economy continued to disappoint, and even when the IMF's broader economic research suggested that a slower approach to cutting the deficit in 2010 might have been less damaging to the recovery.

Nearly every time the Fund has reported on the UK since 2011 it has suggested that the pace of tightening might need to be rethought, if the prospects for growth got even worse.

But although the growth forecasts have been continually revised downwards, the time for that rethink somehow never arrived.

Except, last year, the Fund's annual health check of the economy included a few sentences that were more concrete - and which included a date. (I wrote about it at the time)

The report warned that the pace of fiscal tightening being planned for 2013-14 was faster than in 2012-13, and might be difficult for the economy to handle, if the recovery continued to be anaemic.

Specifically, the report said the plans "would need to be scaled back if growth does not build momentum by early 2013".

In an interview for the Today Programme, Mr Blanchard has now told the BBC that the Fund's advice had not changed: "Our early advice is still very much there... If things look bad at the beginning of 2013, there should be reassessment of fiscal policy. We still believe that."

Mr Osborne will still be in Davos when the first estimate for growth in the last three months of 2012 is released tomorrow. If that is as weak as many fear, the IMF seems to think that the Budget in March will be the time for the chancellor to take stock.

Stephanie Flanders Article written by Stephanie Flanders Stephanie Flanders Former economics editor

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  • rate this

    Comment number 221.

    If nobody has beaten the half-wit hooligans through all of history it's because the rest of them only have a quarter.

  • rate this

    Comment number 220.

    219 You Sir are a narrow minded bigot

  • rate this

    Comment number 219.

    Talk about the UK having the most two-faced PM ever - he lectures Europeans about "smell the coffee" about Tax avoidance schemes, and does nothing. Woulds love to see his Accountants reveal how he and his family's inherited wealth were made, after all he promised to be the most transparent PM ever! One assumes he has nothing to hide?

  • rate this

    Comment number 218.

    @161 -- Megan. Presumably I'll get the chance to load myself up with debt before we try your "Jubilee" idea.

  • rate this

    Comment number 217.

    Bit off-topic but...

    Was distressed to read that one of the bandits attending the WEF, who made a stirring speech defending the absolute right of mega-banks like Morgan Stanley to swallow-up entire economies if only it profited them (meaning him) and never to be prevented by anything so contemptible as an elected govt, had had his bonus cut by 50% last year

    To only $10 million

    Think about that

  • rate this

    Comment number 216.

    "Davos a 'constellation of egos' - Boris Johnson"


    Oh, the irony...

  • rate this

    Comment number 215.

    The Tories are only interested in attacking the welfare state and,consequently, the decent living standards of ordinary people. If George had any desire to be fair, he would agree to the Robin Hood Tax, but GB is one of only four EU states against it. He and Dave want change in Europe so that they can make life worse for the poor - he calls it a 'flexible' labour market.

  • rate this

    Comment number 214.

    It's amusing how many posters who would usually slag IMF are now prepared to accept their advice.

    One thing is clear. Many seem prepared to enter into ever larger bets. Irony is more govt spends (Lord it's already spending almost 50% of GDP) more that public servants, bankers, corporates, trade unions & whole range of interest groups will be able to gorge at taxpayers expense.

    I despair

  • rate this

    Comment number 213.

    Just a quick word from a Swiss ...DAVOS is pronounced with the accent on the last LAST syllable; and more like DAVOOS!!

  • rate this

    Comment number 212.

    Cameron just wants to take more from the people who have little and give more those who have a lot.
    thats all austerity does, look around the EU, its easy to see.

  • rate this

    Comment number 211.

    207. RonC
    "For an economy to work people need money to spend."

    But people do havee more money to spend (on average that is) . Just that now it has become even more concentrated than before the financial crisis in the hands of fewer people, whilst the majority have less. So luxury brands doing better than those that depend on selling to the majority.

  • rate this

    Comment number 210.

    The Govt's medicine for the economic illness is not making things better.....

    ....far form it is making things worse.....

    ....2013 is the year of the UK's first ever Triple Dip recession.....

    ...we were gorwing at the last election then austerity put us into reverse.....

  • rate this

    Comment number 209.

    So Osborne takes ignorance and arrogance to a whole new level. Despite being told your plan isn't working you may need to have another. He defies the advice of the Chief Economist at IMV and carries on the with his failed plan.

  • rate this

    Comment number 208.

    @199. Are you being serious when you state: "... economy is highly volatile and will remain so until abominations like the EU die and stable sovereign states re-emerge"?

    When in the history of Europe have we ever had these so-called Stable Sovereign states?

  • rate this

    Comment number 207.

    What plans?
    What recovery?

    When DC and comrades took over the patient was soon flat lining but now I think we can pronounce it dead.

    For an economy to work people need money to spend.

  • rate this

    Comment number 206.

    • 198. Little_Old_Me
    “Please show me just one little example of where a nation's debt problems have been solved by Neo-Liberal austerity measures......”

    Err……….. err….. might be worth considering that every person made redundant who takes a pension don’t appear in the unemployment figures… or err…..there’s green shoots there… or err… well there must be one somewhere?

  • rate this

    Comment number 205.

    Apparently GO prefers consistency to actually solving the problem. I have always been worried by true believers as they tend to ignore evidence, Marxists and Free Market fundamentalists alike.
    Give me a good old pragmatist who changes policy when they see it doesn't work. Thats what the Tories pre Thatcher were about.
    So we will all suffer in the educating of George

  • rate this

    Comment number 204.


    Look at figures from 93-01. Spending as % of GDP decreased

    In 01 we ran surplus. Then Gordon let loose

  • rate this

    Comment number 203.

    I don't know why anyone would take any notice of the IMF. A clueless lot with no ideas at all. lagarde paid about 600,000 euros to issue incorrect forecasts and talk rubbish. We could save some money and get rid of the IMF to start with.

  • rate this

    Comment number 202.

    #193 Up2snuff Plan A is working gloriously! It is to create hysteria about the public finances and a golden opportunity to dismantle anything remotely classed as public provision. Allowing Serco, Capita G4S et al to pick up the profitable bits and charities the non-profitable. The actual economy is irrelevant
    It's a race to the bottom for most and a nice little earner for the select few.


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