Today the IMF released a concluding statement of its Article IV UK consultation. Many of the things they said in their consultation resonate with what we have previously said about the context the government is currently operating within.
This blog gives a short summary of some of their recommendations.
On fiscal strategy the IMF said:
The government's commitment to the fiscal plan they set has given them credibility with markets.
Government has been flexible in its budget approach.
But consolidation will drag on growth and the government needs to balance their aim of reducing debt with promoting growth.
The government needs to take some action now including:
- Bringing capital investment forward where possible;
- Changing the composition of consolidation to boost growth; and
- Addressing some concerns raised about the Help to buy scheme.
They also recommend some structural reforms to help the rebalance over the medium term into a more dynamic, balanced, and robust economy. These structural reforms included:
More infrastructure investment;
Reducing concentration of the banking sector - something which we have been calling for in the SME banking sector for some time; and
More support for retraining opportunities.