Tuesday, August 2, 2011

International Monetary Fund: Britain’s economic outlook

The International Monetary Fund claimed today that if UK economic growth remains weak and the unemployment stays high, British monetary authorities will need to extend stimulus measures, for example, reduce taxes or do more quantitative easing.

The IMF kept its forecast for the nation’s GDP advance at 1.5% in 2011 and 2.3% the next year.

British consumers are suffering from high inflation twice above the Bank of England’s 2% target. In the second quarter British GDP added only 0.2% compared with the level of the first 3 months of the year, while the annual growth accounted for 0.7%.  

Prime Minister David Cameron has pledged to continue conducting austerity measures to decrease the deficit. For now the IMF recommends Britain’s government and the central bank to stick to their current policy as the weakness in economic growth and high inflation rate may turn out to be temporary.

The BoE will announce its policy decisions on Thursday, August 4, at 3:00 pm (GMT + 4). Economists surveyed by Bloomberg News expect the central bank to leave the borrowing costs at the current 0.5% level continue purchasing bonds with 200 billion pounds ($329 billion).

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