The Prime Minister has said it is time for Plan A+ after the International Monetary Fund (IMF) slashed its growth forecast for the UK.
The IMF predicted the economy will shrink by 0.4% this year – a downgrade from three months ago, when growth of 0.2% was predicted for the year. But David Cameron rejected calls for a change in the Government’s economic strategy.
“What we need in Britain is not plan B – which is more borrowing,” he told News Reporters. “How can you borrow your way out of a debt crisis if the problem was created by too much spending, too much borrowing, too much debt?
“What we need is what I call Plan A+. We need to keep our plans – difficult though they are – to cut public spending and deal with the deficit.
“But we need to add to that every measure that business has been asking for, and that’s what we’re doing.”
The IMF also cut its forecast for economic growth in the UK next year from 1.4% to 1.1%.
The combined cut in both years’ economic forecast is greater than any other country in the developed world. The downgrade, which follows a similar shift from the Organisation for Economic Co-operation and Development (OECD) last month, comes only hours after Chancellor George Osborne pledged at his party conference to persevere with his austerity plans.
In its World Economic Outlook, the fund cut its forecast for economic growth in the world’s advanced economies from 2% this year to 1.5%. But it was Britain that faced greater cuts in the IMF forecast than any of its major fellow economies, including Spain, Italy and other troubled euro economies.
The IMF also revealed that this year, for the first time in the crisis, Britain will have a bigger budget deficit than Greece, as the economic collapse undermines the public finances.