IMF steps up calls for Britain to ease austerity drive

A senior member of the International Monetary Fund added to calls Saturday for Britain to slow the pace of its austerity programme, a day after the country was stripped of its triple-A rating. David Lipton, the IMF's first deputy managing director, said the "pace of consolidation" should be reconsidered in light of the weaker than expected British economy. Earlier this week the IMF cut Britain's growth forecast growth for this year from 1 percent to 0.7 percent and lowered its 2014 projection from 1.9 percent to 1.5 percent. "The Fund's view is clear," Lipton told Sky News. "The UK economy has turned out to be somewhat weaker than had been foreseen, so our view is that the pace of consolidation ought to be reconsidered, and we'll want to come and have some discussions over that." His comments come after ratings agency Fitch lowered Britain's status from AAA to AA+ on Friday, citing a "weaker economic and fiscal outlook". In response, Britain's coalition government indicated that the downgrade would not alter the path of deep spending cuts set out by finance minister George Osborne. Fitch's downgrade comes after rival agency Moody's stripped Britain of a triple-A debt rating on February 22, dropping it by one notch. Moody's argued that government debt was still mounting and that growth was too weak to reverse the trend before 2016. Lipton's remarks add to the pressure from the IMF's chief economist, Olivier Blanchard, who has also urged Britain to lessen the pace of its austerity programme because of the threat of a triple-dip recession. Official economic data out next week will show whether Britain fell into recession during the first quarter of 2013. Lipton said it remained "very important" for the British government to continue reducing its debt. But he added: "The question now is whether the pace is right or too ambitious given the weakness of the economy. "The key to us, the bottom line to us, is that they may want to consider adjusting the pace of consolidation." A spokeswoman for Britain's Treasury stressed that Britain is forecast to have stronger growth than France or Germany in 2013. Difficulties in the eurozone were "creating economic headwinds", she added. "However, as the Chancellor said at the Budget, we are slowly but surely fixing this country's economic problems," she added. "The deficit is down by a third, a million and a quarter new private sector jobs have been created and, because of the credibility the government has earned, families and businesses are benefiting from near-record low interest rates." Recent official data revealed that British gross domestic product (GDP) shrank 0.3 percent in the fourth quarter of 2012 compared with the previous three months. Another contraction in the first quarter of 2013 would place Britain in its third recession in under four years