Lagarde says UK should reconsider pace of austerity if growth slows

(Source: Reuters)

The IMF's managing director Christine Lagarde has said that she supports chancellor George Osborne's policy of austerity, but that if growth is particularly low consideration should be given to slowing the pace.

She said that without having looked under the skin of the UK's economy, growth numbers do not appear particularly good. Lagarde stressed that the IMF had repeatedly the policy of austerity, but that a review of the UK's economy in weeks to come is to take place.

Allister Heath has slammed the top down approach of the IMF before:

Its guesstimates should not be taken seriously. Traditional macroeconomics, with its spuriously precise output gaps, excessive aggregation, ridiculously naive view that tough decisions can realistically be delayed by real world politicians until the “optimal” moment, simplistic approach to the structure of capital and belief in the possibility of endless demand-management is no longer that useful. We need new models and a new framework.

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