Tag Archives: growth

IMF visit sparks media buzz

9 May

By Chris Hansell

Photo by altogetherfool, via Flickr

Photo by altogetherfool, via Flickr

For the next two weeks the UK will be haunted by a gang of economists from the International Monetary Fund (IMF). The 67 year old organisation has let slip a few surprises in recent weeks, but the amount of media attention on the visit has also left me a little surprised.

At one time our Chancellor may have welcomed the visit, reasonably expecting a public pat on the back and a few positive column inches on the side for his austerity programme. This may not be the case for this visit. The IMF’s Chief Economist, Frenchman Olivier Blanchard, has recently been making comments suggesting the Chancellor needs to rethink his plan and perhaps ‘slow down’ the deficit reduction programme.

To ramp up the pressure on George Osborne the Trade Union Congress (TUC) craftily chose this week to publish a report on the economy. Some of its findings will have pleased union leaders, providing probably enough ammunition to last the entire two weeks of the IMF visit.

The news media have so far stuck to their respective political trenches on the IMF visit, churning out the kind of opinions and observations we have come to expect from each of them.

The Spectator likened the visit to an Ofsted inspection. Spectator blogger Isabel Hardman said IMF reports have tended to be ‘so oblique that anyone occupying any part of the political spectrum can find something to cheer them and something else with which to prod their enemies’. This is obviously intended to undermine the visitors before they have had the chance to say anything, but I find that I must agree despite myself.

The Chancellor will still not be getting my pity though, and the idea that Mr Osborne might feel sympathy for teachers seems a little comical considering the government’s education policy.

In a foreseeable move the Guardian married the IMF visit with the TUC report in an article that labelled the recent comments of Mr Blanchard and his colleagues as an ‘embarrassment for Osborne’. Economics reporter Katie Allen also described the UK economy as ‘flatlining’ and pointed to the IMF’s reduced forecast for UK growth.

IMF growth projections for 2013 and 2014 (Made in April)

IMF growth projections for 2013 and 2014 (Made in April)

The intention here is clear: point to how the IMF has cast doubt on the government’s austerity drive.  The intention of the Independent seems to be much the same in their article. Of course the IMF has spent decades producing forecasts and has often got things wrong. While I agree with the anti-austerity sentiment using IMF figures to build a case may not be the best strategy.

Before I move on I’d like to tackle one more example. Financial news website this is money has been showing up in my news searches a lot recently (isn’t my life just rock n roll?) so I thought I’d have a peek at what they say.

The website lines up a number of arguments the Chancellor could utilise against the IMF, but one nugget stood out for me. ‘Osborne’s hand has been strengthened by reports that more than forty global companies are considering moving to Britain to take advantage of low corporation tax rates’ the article says. One industry insider tells the website that this could raise £1 billion in tax revenue.

This is not the trump card it seems, and cuts to corporation tax are not really austerity policies. The cut of corporation tax from 28% earlier this year to 20% by 2015 will no doubt cost the Treasury so much a boost of £1 billion will be redundant.

Now let’s get to the point. You might have noticed in the first paragraph I said how surprising I have found all this coverage. Well, here’s why:

That an IMF visit warrants this much coverage confuses me. Don’t get me wrong – as someone well aware of the IMF’s less-than-polished record I am glad they’re being given the kind of scrutiny they should get every day of the year.  What confuses me is that so many news outlets have decided they should all cover the story at once.

A stuffy, Washington based institution that has usually only ever had real clout in developing countries pops in for a look around and it’s in almost every paper. Looking around perhaps it isn’t so confusing. The economic disaster that was Greece planted the IMF in the public consciousness for better or worse. Austerity has put the economy at the heart of the news cycle and everyone has an opinion. It will probably even decide the next general election.

In the meantime the economic debate is still open and despite everything else this at least is something we can be pleased about.

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