These are troubling times for the UK chancellor, this week growth figures suggested that the country is teetering on negative growth yet again. The alarming prospect of a triple dip recession has added to the call that perhaps he was cutting the deficit a little bit too quickly. Oliver Blanchard the IMF’s chief economist has added his voice to the call to slow down the cuts.
Most analysts have been rather surprised to the extent that austerity has hit the economies of countries like the United Kingdom. The austerity and debt reduction policy was largely supported as the best solution to the debt crisis. However the huge impact it seems to be having on economic growth suggests that perhaps the policy needs modification.
David Cameron has been quick to defend his chancellor, pointing out that the deficit has already been reduced by 25% and corporation tax has been cut to the lowest level of any G8 country. However the IMF economists maintain that the policy should be adapted if results aren’t improving. Growth has been impacted by a factor of 2-3 times more than expected. Many countries like Spain and Greece have no alternative due to the pressure from financial markets. The UK however does have the option to slow down the debt reduction measures.
The interview with Oliver Blanchard was conducted by the BBC. It was conducted by the Economics editor Stephanie Flanders and is available on the BBC Iplayer application. For non UK residents this post might be useful – http://www.anonymous-proxies.org/2009/07/can-i-watch-uk-tv-abroad.html, basically explains the options for changing your IP address or other technology options.
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