HISTORIC PRESS RELEASE : The IMF commends UK Economic Policy [February 2001]

The press release issued by HM Treasury on 28 February 2001.

The IMF has “commended” the UK Government “for the continued strong performance of the UK economy”.

At a discussion in Washington on 23 February, the IMF said that “plans to increase public investment in infrastructure and human capital are justified in light of the evidence” and welcomed the Government’s efforts “to enhance competition, innovation and entrepreneurship”.

The Directors agreed that “sound fiscal and monetary policies, underpinned by transparent medium-term policy frameworks as well as sustained implementation of structural reforms” have contributed to the strength of the economy in recent years. They also “expected output growth would remain robust” while “prospects for inflation remain benign”.

Against this benign inflation outlook, the Directors noted that “even after taking into account recent spending decisions, the fiscal position remains sound and fully consistent with the authorities medium-term fiscal framework”.  The Chancellor agrees entirely with the Directors’ conclusion that “additional fiscal stimulus would limit the room for further interest rate cuts”. That is why he has made clear that he intends in the Budget to lock in the tough fiscal stance set out in the pre-Budget report and Budget 2000.

Commenting on the IMF’s report, the Chancellor, Gordon Brown, said:

“I welcome the IMF’s report. It outlines the importance of economic stability and the contribution of the Government’s macroeconomic framework to the ongoing success of the UK economy.  Moreover, it highlights the contribution of our prudent and cautious approach to managing the public finances to these successes in recent years.

I agree with the IMF that boosting UK productivity performance is a key priority to achieving higher long-term growth and sustained increases in living standards.  Our approach recognises the importance of economic stability and strong policy frameworks, combined with microeconomic reforms and policies to enhance competition, innovation and entrepreneurship, for building long-term economic strength, high levels of productivity growth and rising living standards for all.”

As was the case last year, at the request of the UK Government the IMF is today publishing its Article IV staff report on the UK economy in full, along with the record of the IMF board discussion, and the UK’s statement in the board meeting.

Commenting on publication of the Article IV and associated papers, the Chancellor said:

“The publication of the IMF’s report on the UK economy clearly demonstrates our commitment to open up the IMF’s scrutiny process.  Making available clear independent information on policy is an essential part of the new international financial architecture.”