IMF calls on Britain to ease austerity drive

Britain should lessen the pace of its austerity programme of deep spending cuts and tax hikes, the IMF's chief economist said on Thursday, with the country at risk of falling back into recession this year. Speaking to BBC radio, Olivier Blanchard said Britain's annual budget statement due in March would be a good time for its finance minister George Osborne to "take stock" of his austerity programme, or so-called Plan A. Though not new advice, the comments on the eve of data set to reveal that Britain's economy contracted in the final quarter of 2012, puts fresh pressure on Prime Minister David Cameron's coalition government to alter its plans. "We've never been passionate about austerity," Blanchard said in an interview, one day after the International Monetary Fund said the global economy would grow slightly less in 2013 than it previously expected. The IMF also downgraded its growth outlooks for Britain. "From the beginning we have always emphasised that fiscal consolidation should be slow and steady," said Blanchard. "We said that if things look bad at the beginning of 2013 -- which they do -- then there should be a reassessment of fiscal policy." The economist added: "We think that slower fiscal consolidation in some form may well be appropriate." The IMF on Wednesday projected global gross domestic product (GDP) annual growth of 3.5 percent this year, a dip of 0.1 points from its October forecast, and 4.1 percent in 2014. It added that Britain was expected to expand by only 1.0 percent this year, rather than by the Fund's previous estimate of 1.1 percent. It also downgraded its 2014 GDP forecast to 1.9 percent from 2.2 percent. Economists meanwhile expect official data due on Friday to show a contraction in British GDP for the three months to December compared with the third quarter of 2012, putting Britain at risk of a "triple-dip" recession. Britain sank into the first phase of a double-dip recession in 2008 as a result of the devastating global financial crisis that sparked a number of vast banking bailouts. The economy rebounded in late 2009 but struggled to stage a convincing recovery and fell back into a second downturn in late 2011, as the eurozone crisis loomed large. "Friday's GDP release is likely to show a contraction of the UK economy in the fourth quarter, heralding talk of a triple-dip recession," said Conall Mac Coille, chief economist at Davy financial group. "We expect that the contraction will be much sharper than the minus 0.1-percent quarter-on-quarter consensus," he added in a note to clients.