Britain urged to ease austerity plans

Mark Carney, the incoming Bank of England governor, has described Britain as a "crisis economy" as he sought to play down hopes that he could ride to the country's rescue.

Mark Carney, the incoming Bank of England governor, has described Britain as a "crisis economy" as he sought to play down hopes that he could ride to the country's rescue.

Speaking on the fringes of the International Monetary Fund's spring meetings in Washington, he said: "The US is breaking out of the pack of crisis economies that include the eurozone, the UK and Japan."

His words came just days after the IMF slashed its forecasts for British growth this year and next, and urged Chancellor George Osborne to scale back his £130 billion ($193 billion) austerity program to aid the recovery.

IMF managing director Christine Lagarde signalled that the fund will demand Britain ease off at its annual update on the economy next month.

Asked whether she agreed with IMF chief economist Olivier Blanchard that the Chancellor was "playing with fire" with his economic plans, she said: "We have said that should growth abate then there should be consideration to adjusting by slowing the pace.

"The growth numbers are certainly not particularly good. So, in a sense, this is a continuation of the position. What has changed is clearly the quality of the numbers."

Asked about his opinion on the British recovery, Mr Carney said he would reserve his opinion until he starts at the bank in July. However, he added that "the flip side [of Britain's problems] is the tremendous opportunity that is there".

He stressed that governments should not be looking to central banks to return countries to prosperity.

"Can central banks provide sustainable growth? No," Mr Carney said. "They can help with the transition, but they can't deliver long-term growth. That needs to come through true fiscal adjustments and necessary structural reforms ... Sustainable growth comes from the private sector."

Telegraph, London

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