IMF in Osborne budget warning

Chancellor George Osborne consider introducing increased infrastructure spending in his next budget to boost growth, the International Monetary Fund has warned.

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Weather and Jubilee bank holiday may have hit economy

Royal revellers wait in the rain on the south bank of the River Thames on June 3rd Credit: Press Association

Fears that the double-dip recession persistedbetween April and June are set to be confirmed next week as figures show the Diamond Jubilee and record rainfall kept the economy in the doldrums.

Gross domestic product - a broad measure for the total economy - is forecast to have shrank for the third quarter in a row by around 0.4% between April and June.

The extra bank holiday granted for the royal celebration and the wettest April-to-June period since records began in 1910 hit output, analysts said.

IMF advises Chancellor to go easy on austerity

Chancellor George Osborne should be ready to slow the pace of his tough austerity measures and shake up the annual budget if the economy fails to come to life, the International Monetary Fund (IMF) warned today.

The organisation said Mr Osborne should consider introducing increased infrastructure spending in his next budget to boost growth, which could be funded by further tax reforms.

ITV News' Economic Editor Richard Edgar reports:

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Labour: 'Urgent action needed to boost jobs and growth'

Labour’s shadow chancellor Ed Balls MP. Credit: PA

Ed Balls MP, Labour’s shadow chancellor, said in response to the IMF’s report on the UK economy: “This is a very serious warning to the Chancellor that urgent action to boost jobs and growth is needed.

"How much longer must we wait, and how much more damage must be done, before George Osborne finally does the most important u-turn of all?

“The IMF is clear that the government’s economic plan - Plan A - has failed. They say that weak growth means the government will miss its debt target and that the Chancellor’s existing policies risk causing permanent damage to the British economy.

TUC General Secretary: 'Government must get economy growing'

TUC General Secretary Brendan Barber. Credit: PA

Commenting on the IMF country report on the UK, TUC General Secretary Brendan Barber said: "Today’s alarming health check on the UK economy from the Chancellor’s favourite economic experts makes it clear that plan A is not working.

“The recovery has ground to a halt, the government is set to miss its deficit target and austerity has shrunk the size of the economy by £37.5bn over the last two years. Continuing along this path could cause permanent damage to the economy.

“Even the Prime Minister has hinted Britain could face perpetual cuts. The government must call time on self-defeating austerity and stimulate demand to get the economy growing again."

IMF's budget warning to Chancellor George Osborne

Chancellor George Osborne. Credit: PA

Chancellor George Osborne should be ready to slow the pace of his tough austerity measures and shake up the annual budget if the economy fails to come to life, the International Monetary Fund (IMF) has warned.

The IMF, led by former French finance minister Christine Lagarde, said the Government should ease its fiscal consolidation, which includes spending cuts and tax reforms, if the recovery continues to stall.

The organisation said Mr Osborne should consider introducing increased infrastructure spending in his next budget to boost growth, which could be funded by further tax reforms.

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