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.
The Chancellor George Osborne has admitted that mistakes were made with the presentation of his widely criticised Budget. But he has insisted that the policies are right and the right decision for the country.
His comments come amid new criticism of him for agreeing to loan the International Monetary Fund another £10 billion for its bailout fund.