IMF Chief nudges world politicians into action over debt

French Finance Minister Christine Lagarde (L) ...

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IMF Chief Christine Lagarde gave her assessment on the Global Economy in Washington today – urging dithering governments to get a move on – and stop squabbling about whether to reduce their government debts or not.

 

She was clearly having a dig at some Euro countries who are in the mire – facing defaulting on their debt, including the US.

 

The head of the International Monetary Fund said that it was time to nudge politicians into action, but that there was light at the end of the tunnel regarding the wider Global economy - if countries followed the IMF’s recommendations.

 

She outlined her four point plan for lifting the Global economies out of the gloom, which included, repair, reform of the financial sector, rebalance of the public sector vs private, and the rebuilding of struggling economies into new ones.

 

Lagarde said that in some ways. it was a case of sticking out the financial pain, and being patient, but that countries who were still dithering with tackling their deficits and huge debts, should get a move on.

 

She said: “There is a path to recovery, but it is much narrower than four years ago.”

 

She said that some economies had the tools to prevent there from being a financial meltdown like there was back in 2008, when the crisis struck.

 

Lagarde said that there needed to be reform in the financial sector, and that there needed to be liquidity in Global banks, so that businesses could get money to borrow, as well as households.

 

Her assessment comes as the IMF had earlier in the week downgraded growth forecasts for some EU countries, including the UK, which was downgraded to 1.1%.

 

Labour have said that George Osborne, the Chancellor of the UK, should ease off the brakes on deficit reduction, and shadow Chancellor Ed Balls claimed there should be a cut in VAT to boost consumer spending on the High Street.

 

According to Andrew Neil on The Daily Politics, UK spending was being cut at just 0.7% by UK leaders, and he said that Labour, had they been in charge of the nation’s finances, would probably not have much more leverage to cut spending.

 

Ed Balls said a week ago on news channels that the IMF were hoping that things would go right for the UK economy – but were gradually pushing away from supporting the coalition’s stance on instant deficit reduction.

 

At the Lib Dem conference, Deputy PM and Lib Dem leader Nick Clegg yesterday said in his speech that the government were right to focus on reducing the deficit – as it had given the markets confidence at the time.

 

“it wasn’t an easy decision, but it was right, he said.”

 

Vince Cable the Business secretary said on Monday that the UK financial crisis was the “financial equivalent of war.”

 

Reports have suggested that the Bank of England may do another round of Quantitative Easing, the printing of money.

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