19 Jul 2012

IMF / UK

Releasing the conclusions of its annual survey of the UK economy today, the International Monetary Fund (IMF) tells UK policymakers they may need to adopt further credit easing measures and slowing the pace of fiscal tightening to avoid permanently damaging the long-run capacity of their economy. IMF

Posted at: July 19, 2012 10:58 am

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STORY: IMF / UK
TRT: 2.20
SOURCE: IMF
RESTRICTIONS: NONE
LANGUAGE: ENGLISH / NATS

DATELINE: 12 JULY 2012, WASHINGTON, D.C. / FILE

SHOTLIST:

FILE – 2011, LONDON, UNITED KINGDOM

1. Wide shot, UK flag in the wind with bell tower in background
2. Wide shot, Thames river with Gherkin building in background

12 JULY 2012, WASHINGTON, D.C.

3. SOUNDBITE (English) Ajai Chopra, Deputy Director European Department, IMF:
"Looking ahead, we do see growth picking up, but it will pick up very modestly, and what's holding growth back is insufficient demand.  Demand is weak because of weak confidence, because of high uncertainty, because of tight credit conditions, and also because of headwinds from fiscal tightening. So, what we have suggested to the UK authorities, our main message, is that we need an easier macroeconomic policy stance to help support the economy, to help it recover faster, because if the recovery is too slow and there's a lot of slack in the economy, this could affect productive capacity over the longer term."

FILE – 2011, LONDON, UNITED KINGDOM

4. Close up, Big Ben
5. Med shot, Big Ben

12 JULY 2012, WASHINGTON, D.C.

6. SOUNDBITE (English) Ajai Chopra, Deputy Director European Department, IMF:
"To be able to recover, the UK economy needs to rebalance from relying on domestic demand, mainly consumption, toward relying much more on exports.  Now, the rise of the Asian economies is a tremendous opportunity for the UK in this regard."

FILE – 2011, LONDON, UNITED KINGDOM

7. Med shot, people in the street 
8. Wide shot, people walking on Southwark Bridge

12 JULY 2012, WASHINGTON, D.C.

9. SOUNDBITE (English) Ajai Chopra, Deputy Director European Department, IMF:
"Economic prospects in the UK depend very much on the resolution of the sovereign debt crisis in the Euro zone right now, hence, it is powerfully in the interest of UK policymakers to work together with their counterparts in Europe to help resolve this crisis, to help make both the European Union, of which the UK is a member, and also the Euro zone, much more resilient and well functioning in the future."

FILE – 2011, LONDON, UNITED KINGDOM

10. Wide shot, square with Horseman statue 
11. Wide shot, London bus on Oxford Street

STORYLINE:

The International Monetary Fund (IMF) has released today (19 July) the conclusions of its annual survey of the UK economy. The British economy has been flat for two years and this stagnation has left the country's output still six percent below its pre-crisis level.

Growth is still too weak, and unemployment too high, particularly amongst young people.

But, "Looking ahead, we do see growth picking up, but it will pick up very modestly, and what's holding growth back is insufficient demand.  Demand is weak because of weak confidence, because of high uncertainty, because of tight credit conditions, and also because of headwinds from fiscal tightening. So, what we have suggested to the UK authorities, our main message, is that we need an easier macroeconomic policy stance to help support the economy, to help it recover faster, because if the recovery is too slow and there's a lot of slack in the economy, this could affect productive capacity over the longer term", says Ajai Chopra, IMF's Mission Chief for the UK.

To avoid permanently damaging the long-run capacity of their economy, UK policymakers may need to adopt further credit easing measures and slowing the pace of fiscal tightening. 
But other policies should also be considered.

"To be able to recover," adds Ajai Chopra, "the UK economy needs to rebalance from relying on domestic demand, mainly consumption, toward relying much more on exports.  Now, the rise of the Asian economies is a tremendous opportunity for the UK in this regard."

The IMF noted that sixty percent of British trade is done with Europe and that it is in Britain's interest to help resolve the Euro crisis.

"Economic prospects in the UK depend very much on the resolution of the sovereign debt crisis in the Euro Zone right now, hence, it is powerfully in the interest of UK policymakers to work together with their counterparts in Europe to help resolve this crisis, to help make both the European Union, of which the UK is a member, and also the Euro Zone, much more resilient and well functioning in the future."