{
  "title": "2017 UK Article IV Press Conference: Opening Remarks by IMF Managing Director Christine Lagarde",
  "publication": "IMF News, December 20, 2017",
  "sourceUrl": "https://www.imf.org/en/news/articles/2017/12/20/sp122017-2017-uk-article-iv-press-conference-opening-remarks-by-managing-director",
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  "summary": "Remarks delivered at the conclusion of the IMF’s annual Article IV consultation with the UK.",
  "publishDate": "2017-12-20",
  "sections": [
    {
      "heading": "Introduction",
      "content": "- Remarks delivered at the conclusion of the IMF’s annual Article IV consultation with the UK.\n- Acknowledgement of the UK authorities’ active engagement in the consultation process.\n- Recent major developments: voters’ decision to withdraw from membership in the European Union and the government’s decision to invoke Article 50.\n- Note: UK not expected to leave the EU until 2019."
    },
    {
      "heading": "Economic Outlook",
      "content": "- Global forecast from last October: 3.6% growth this year, and 3.7% next year.\n- UK-specific developments since May of last year:\n  - Significant depreciation of sterling following the referendum has pushed inflation over 3 percent, squeezing real incomes and private consumption.\n  - Companies are delaying some investment decisions until they have greater clarity about post-Brexit trade rules.\n- GDP growth projections and recent comparators:\n  - Projected GDP growth of 1.6 percent this year.\n  - Down from 1.8 percent last year and 2.3 percent in 2015.\n  - Growth is projected to remain around 1½ percent next year, as uncertainty about the shape of Brexit persists and inflation remains above target."
    },
    {
      "heading": "Fiscal Policies",
      "content": "- Progress and current fiscal position:\n  - Significant progress made in reducing the deficit since the global financial crisis.\n  - Public debt remains high, at 87 percent of GDP.\n- Policy recommendation:\n  - Continued deficit reduction is critical to create further room to respond to future shocks.\n- Long-term fiscal pressures:\n  - Population aging expected to lead to material increases in spending on health care, pensions and long-term care.\n  - Productivity growth has been slow.\n  - A slowly growing economy implies fewer resources to meet increased spending.\n- Risks:\n  - Challenges may worsen if trade barriers further reduce productivity.\n  - Future difficult decisions may be required about the size of the public sector and the mode of delivery and financing of public services."
    },
    {
      "heading": "Structural Reforms",
      "content": "- Role: Structural reforms are important for raising productivity.\n- Identified gaps:\n  - UK goods and labor markets are very competitive, but the UK underinvests in infrastructure and innovation and falls short in human capital development.\n- Recent government initiatives praised:\n  - Increasing public sector investment.\n  - Reforming technical education.\n- Further recommended reforms:\n  - Easing planning restrictions.\n  - Reforming property taxes to boost housing supply."
    },
    {
      "heading": "Monetary Policy",
      "content": "- Stance:\n  - Agreement with the Bank of England that tightening should proceed at a gradual pace.\n- Rationale:\n  - Gradual tightening will return inflation to target as the impact of the depreciation of sterling fades.\n- Conditional recommendation:\n  - A faster rate of tightening may be called for if low unemployment results in too rapid wage growth."
    },
    {
      "heading": "Financial Sector",
      "content": "- Status of banks:\n  - UK banks have strengthened steadily since the financial crisis and are in a far better position today with respect to capital, leverage and liquidity.\n- Preparations for Brexit:\n  - Primary responsibility for readiness lies with banks and other financial institutions themselves.\n  - UK authorities have been proactive in engaging with institutions to ensure they are well-prepared.\n- Cross-border cooperation:\n  - Given the complexity of the UK financial system and its high degree of global integration, continued close cross-border regulatory and supervisory cooperation between the UK, EU and other relevant authorities is essential to manage risks."
    },
    {
      "heading": "Brexit Negotiations",
      "content": "- Progress welcomed:\n  - Recent progress in UK–EU negotiations allows discussions to move to issues related to the future trading relationship and a transition period.\n- Policy position:\n  - The ultimate decision on the form of the UK–EU relationship is for the UK and EU to decide.\n  - An agreement that minimizes the introduction of trade barriers and allows adequate time to implement changes would best support stability and growth.\n- Tasks and challenges identified:\n  - Negotiating a new trade deal with the EU.\n  - Creating domestic capacity to take over new responsibilities.\n  - Negotiating new trade arrangements with about 60 countries to replace those that came with EU membership.\n  - Translating many thousands of pages of EU law into UK statutes.\n- Recommendation on transition:\n  - Encourage the UK and EU to reach agreement soon on transitional arrangements that would apply for a period after the UK’s departure to provide households and firms with greater confidence toward the March 2019 exit date.\n- Additional details:\n  - More details and recommended policies are contained in the mission’s Concluding Statement."
    },
    {
      "heading": "Closing",
      "content": "- Invitation to questions.\n\nInternational Monetary Fund — Opening remarks delivered December 20, 2017\n\n---\n\n\n References\n\n- Christine Lagarde\n- United Kingdom: Staff Concluding Statement of the 2017 Article IV Mission\n- United Kingdom and the IMF\n- IMF Policy Advice -- A Factsheet\n- Speeches\n- PRESS CENTER\n- https://www.imf.org/en/home\n\nSource: https://www.imf.org/en/news/articles/2017/12/20/sp122017-2017-uk-article-iv-press-conference-opening-remarks-by-managing-director"
    }
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    "Published: December 20, 2017",
    "Remarks delivered at the conclusion of the IMF’s annual Article IV consultation with the UK.",
    "Acknowledgement of the UK authorities’ active engagement in the consultation process.",
    "Recent major developments: voters’ decision to withdraw from membership in the European Union and the government’s decision to invoke Article 50.",
    "Note: UK not expected to leave the EU until 2019.",
    "Global forecast from last October: 3.6% growth this year, and 3.7% next year.",
    "UK-specific developments since May of last year:",
    "GDP growth projections and recent comparators:",
    "Progress and current fiscal position:",
    "Policy recommendation:",
    "Long-term fiscal pressures:",
    "Risks:",
    "Role: Structural reforms are important for raising productivity.",
    "Identified gaps:",
    "Recent government initiatives praised:",
    "Further recommended reforms:",
    "Stance:",
    "Rationale:",
    "Conditional recommendation:",
    "Status of banks:",
    "Preparations for Brexit:",
    "Cross-border cooperation:",
    "Progress welcomed:",
    "Policy position:",
    "Tasks and challenges identified:",
    "Recommendation on transition:",
    "Additional details:",
    "Invitation to questions.",
    "[Christine Lagarde](https://www.imf.org/en/About/senior-officials/Bios/christine-lagarde)",
    "[United Kingdom: Staff Concluding Statement of the 2017 Article IV Mission](https://www.imf.org/en/news/articles/2017/12/19/mcs122017-united-kingdom-staff-concluding-statement-of-the-2017-article-iv-mission)",
    "[United Kingdom and the IMF](http://www.imf.org/external/country/GBR/index.htm)",
    "[IMF Policy Advice -- A Factsheet](https://www.imf.org/en/about/factsheets/imf-surveillance)",
    "[Speeches](https://www.imf.org/en/news/searchnews)",
    "[PRESS CENTER](http://presscenter.imf.org/)",
    "[https://www.imf.org/en/home](https://www.imf.org/en/home)"
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