Lagarde: UK must cut deficit

Julian Harris
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THE BRITISH government has no choice but to continue with plans to reduce its annual deficit, the head of the International Monetary Fund (IMF) said last night.

Former French finance minister Christine Lagarde (right) recently recommended that some governments had scope to slow down austerity measures in the face of strong economic headwinds.

But yesterday she stated that the UK is not one of them. “Those countries that have fiscal space and that can slow down their fiscal consolidation efforts are very few, and I’m afraid Britain is not in that particular group,” she told Channel 4 News.

On a more upbeat note, Lagarde insisted that the IMF expects Britain to return to levels of growth that will help tackle rising unemployment. “If you look at our forecast for 2012-2013, we’re clearly seeing an improvement going from 0.6 per cent positive to then two per cent positive,” she said.

Earlier in the day the IMF warned that global crude prices could rise as much as 30 per cent if Iran halts oil exports as a result of US and European Union sanctions.

If Iran halts exports to countries without offsets from other sources it would likely trigger an “initial” oil price jump of 20 to 30 per cent, or about $20 to $30 a barrel, the IMF said in its first public comment on a possible Iranian oil supply disruption.