US warned over fiscal cliff as IMF says recovery will be slow

 
Ben Southwood
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THE US will continue to recover through this year and the next, at a mild pace but well ahead of Europe and the UK, according to a report released yesterday by the IMF.

Growth will be two per cent this year, and two and a quarter per cent next year, says the international body. But the organisation warned that this relatively positive outlook came up against several risks, such as the “fiscal cliff”, the Euro crisis, and the growing national debt.

The fiscal cliff is a jump in taxes, combined with a number of spending cuts, together worth about four per cent of GDP, due to come into action automatically next year as discretionary plans lapse.

The IMF warns that this jump could have significant negative effects on recovery, but also stresses that some measures must be taken to rein in the deficit.

The report came as new jobs data revealed that new claimants dipped some 30,083 last week, on unadjusted figures. This positive figure was backed up by a 97,192 fall in unadjusted claimant count unemployment in the previous week.