United Kingdom: 2010 Article IV Consultation: Staff Report; Staff Supplement; Public Information Notice on the Executive Board Discussion; and Statement by the Executive Director for the United Kingdom
IMF Staff Country Reports, November 9, 2010
Source details
- Canonical URL
- United Kingdom: 2010 Article IV Consultation: Staff Report; Staff Supplement; Public Information Notice on the Executive Board Discussion; and Statement by the Executive Director for the United Kingdom
Other formats
Bibliographic details
- Published: November 9, 2010
- Series: IMF Staff Country Reports
- DOI: https://doi.org/10.5089/9781455208456.002
Overview
- The U.K. economy is on the mend, but crisis-related scars still need healing.
- The challenge ahead will be to ensure sustainable recovery and balance sheet repair while remaining flexible to respond to shocks.
- A highly accommodative monetary stance is required to offset the contractionary impulse from fiscal policy and keep inflation close to target.
- Risks to this scenario are substantial, and policies will need to adapt if they materialize.
- The government should continue to fortify fiscal institutions.
- Efforts should continue to strengthen financial sector health.
Economic assessment and outlook
- Recovery status: "on the mend" with remaining "crisis-related scars" needing repair.
- Policy stance: "highly accommodative monetary stance" recommended to offset contractionary fiscal impulse and to "keep inflation close to target."
- Fiscal/monetary interaction: Monetary policy must remain accommodative while fiscal consolidation proceeds.
Key risks
- Risks to the baseline recovery scenario described are "substantial."
- Policies will need to adapt if these risks materialize.
Policy recommendations
- Continue to fortify fiscal institutions.
- Maintain flexibility to respond to shocks.
- Continue efforts to strengthen financial sector health.
- Preserve an accommodative monetary stance to counteract fiscal contraction and stabilize inflation around target.
Thematic subjects and keywords
- Subject: Banking, Economic sectors, Financial crises, Fiscal consolidation, Fiscal policy, Inflation, Prices, Public debt, Public sector
- Keywords: authority, CR, Fiscal consolidation, GDP, Global, government function, growth, IMF staff calculation, IMF staff projection, Inflation, ISCR, Public sector, state pension age, UK banking sector, UK budget, UK recovery