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IMF Lowers Britain's Economic Growth Assessment

Originally published on September 22, 2011 12:53 pm
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STEVE INSKEEP, Host:

And let's go next to Great Britain, where officials are grappling with their economy. The International Monetary Fund is warning that the UK is in danger of slipping into recession, and the government is facing calls for more fiscal stimulus. Still, British officials are refusing to ease up on their policy of austerity. Vicki Barker reports from London.

VICKI BARKER: The IMF says Britain's growth rate has slowed to just 1.1 percent. Now comes word the government had to borrow nearly $25 billion last month. Deutsche Bank's George Buckley fears the Conservative-led government's in danger of missing its deficit reduction targets for the year - despite its austerity measures.

GEORGE BUCKLEY: And of course if economic growth continues to deteriorate, you could be looking at even worse numbers looking further forward.

BARKER: A number of economists fear the UK may be sinking into a downward spiral. Low growth means fewer jobs, bringing lower tax revenues, thus forcing the government to cut or borrow or tax even more. But Prime Minister David Cameron and his cabinet ministers insist there will be no U-turn on slashing the UK's debt. There won't be any big new job-creating infrastructure projects either, they say. And that leaves QE ? quantitative easing ? pumping money into the economy. Financial consultant Eric Britton.

ERIK BRITTON: The tidewaters are receding. There's not much left in terms of demand. We've got to do something to try and stimulate it. The last thing that remains is QE.

BARKER: The bank of England may have staved off recession two years ago, with a $300 billion injection. Analysts say the next round of QE could come as early as next month. For NPR News, I'm Vicki Barker in London. Transcript provided by NPR, Copyright NPR.