Olivier Blanchard said the Fund’s advice to the UK remained the same now as it did in October last year, when an IMF report suggested George Osborne’s deficit-cutting programme could suck £76bn more out of the economy than expected by 2015.
“We said that if things look bad at the beginning of 2013 – which they do – then there should be a reassessment of fiscal policy,” Blanchard told BBC Radio 4’s Today programme. “We think this would be a good time to take stock.”
Last year, Christine Lagarde, the IMF’s managing director, said governments that had embarked on spending cuts may have underestimated the impact they will have on economic growth.
An IMF report published a week later endorsed that view, suggesting wealthier countries, such as the UK, would feel the impact more than analysts expected.
