The head of the International Monetary Fund, Christine Lagarde, has endorsed the UK government’s economic strategy.
Her comments came a day after the Washington-based organisation took a gloomier view of the UK’s growth prospects over the next five years. It said Britain’s next government would struggle to reduce the budget deficit – the difference between tax income and government spending – and that rising household debt was threatening the recovery.
Speaking at an IMF meeting in the US capital, alongside the UK chancellor, George Osborne, Lagarde took a more praiseworthy stance, saying the coalition had struck the right balance between spending cuts and tax income to deliver growth.
She said: “It’s obvious what’s happening in the UK has worked.”
Ms Lagarde played down differences between the IMF calculation of the future deficit and the more optimistic one provided by the Office for Budget Responsibility.
The IMF had predicted that the UK will have a deficit of £7bn in 2019-20, while the OBR expects there to be a surplus of £7bn.
Despite the large figures, the difference is just 0.6 per cent of GDP.
Ms Lagarde said the figures were virtually the same, but just calculated differently.
“Generally in any election year, the teams that provide the hypotheticals on which future deficits are forecast, err on the side of caution and assume that whatever is announced is not necessarily or inevitably going to happen,” she said.
“It’s clearly also delivering results, because when we look at the comparative growth rates delivered by various countries in Europe, it’s obvious that what’s happening in the UK has actually worked.”