LONDON (Reuters) - Chancellor George Osborne held up Britain’s recent strong pace of economic growth as vindication of his austerity programme that came under fire from the International Monetary Fund last year.
Osborne, who is attending the IMF’s spring meetings in Washington this week, said healthier banks and a credible plan to fix public finances are essential to getting growth going again after the financial crisis.
“In the UK, we have those conditions in place, and our economy has grown faster than any other in the G7 over the last year and is now forecast by the IMF to do the same in 2014,” he said in an excerpts of a speech he is due to deliver on Friday.
“This is despite warnings from some that our determined pursuit of our economic plan made that impossible.”
At its spring meetings last year, when Britain’s economy looked at risk of entering a triple dip recession, the IMF urged Osborne to change tack and speed up spending as a way to get growth going again.
Now, after 12 months in which the pace of Britain’s economic turnaround has surprised even the government, Osborne appears to be relishing his return to Washington.
In his speech, he cited the strong pace of job creation in Britain and signs of a pickup in business investment.
“All of this demonstrates that fiscal consolidation and economic recovery go together, and undermines the pessimistic prognosis that only further fiscal stimulus can drive sustainable growth,” he said. “Indeed, that is precisely the wrong prescription for our economies.”
Britain’s economy looks set to grow by about 3 percent this year, faster than any other major developed economy and a big boost for the government - which faces national elections in little over a year’s time.
However, until its recent spurt, Britain struggled to throw off the effects of the financial crisis and it is only expected to recover its pre-2008 peak levels of output this year - a level long surpassed by most other advanced economies.
In his speech, Osborne took aim at ideas made popular by former U.S. Treasury Secretary Larry Summers, who has argued that rich economies risk “secular stagnation” if they continue to rely on super-low interest rates and instead governments should aggressively invest now to spur growth.
“Instead of more debt or more government spending, we need to get our public finances in order, make structural reforms and compete in the world again,” Osborne said.
The IMF this week said governments ought to be ready to step in and provide stimulus for their economies via higher public investment if their economies remained weak.
Editing by Mark Heinrich