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IMF report on the UK Economy
26th May 2008
The IMF reports on the health of the UK economy in its latest Article IV Consultation and argues that imbalances in the UK economy have increased the risks facing us during turbulent global times.
“Challenges were evident, however, even before recent global shocks to financial markets and energy and commodity prices. Imbalances had emerged in recent years-inflation, overheating in housing markets, low domestic saving rates, high current account deficits, and sustained declines in the international investment position. Although net (government) debt remains below the G-7 average, fiscal outcomes over the past few years reduced headroom under the sustainable investment and golden rules.”
They argue that there should be no change to the inflation target
“The inflation targeting regime should remain unaltered. Adjusting the CPI target, its definition, or the remit of the Bank of England would be a serious mistake, not least because it risks unanchoring nominal wage settlements without changing the fundamental challenges facing the economy.”
Geoff Riley
Geoff Riley FRSA has been teaching Economics for over thirty years. He has over twenty years experience as Head of Economics at leading schools. He writes extensively and is a contributor and presenter on CPD conferences in the UK and overseas.