Wednesday, January 28, 2009
IMF gloomy - IFS warns of a long road ahead
Posted by David Smith at 08:30 PM
Category: Thoughts and responses

The International Monetary Fund has been revising its forecasts every other month and it has been downhill all the way. The latest projects the worst outlook for the world economy since the Second World War, with growth of just 0.5%. To remind you, its conventional definition of a global recession is growth of below 2%, which rarely happens because global downturns are rarely this co-ordinated.

It predicts a 2.8% decline for the UK this year, just about the biggest in the G7, though hardest hit appear to be the newly industrialised Asian economies, Singapore and so on, projected to decline by 3.9%, not to mention the Irelands and Icelands. More details here.

Meanwhile, the Institute for Fiscal Studies published its annual green budget. It thinks taxes will have to rise or spending be cut by an additional £20 billion on top of the pre-budget report tightening but that it will still take 20 years to get back down to pre-crisis levels of public sector debt as a share of GDP - under 40%. Perhaps 60% is the new 40%. Its press release, together with access to the full report, is here.