Oct. 09 - IMF warns US and European policymakers the slump will get worse if problems aren't fixed, as UK refuses to soften stance on austerity. Ivor Bennett reports.
It's all smiles for Prime Minister David Cameron at his party's annual conference. But the same can't be said of the UK economy. The IMF predicts it'll shrink by 0.4 percent this year after downgrading its growth forecast. Despite the gloomy figures - Britain's Conservative-led government still insists austerity is the only answer. SOUNDBITE (English) UK PRIME MINISTER DAVID CAMERON, SAYING: "It's not an easy path but we have to stick to it because you can't borrow your way out of a debt crisis. Those people who say, well just tear up the plan, spend more and borrow more. How can a problem caused by too much spending, too much borrowing, too much debt, be solved by more spending, more borrowing and more debt?" The health warning wasn't just for Britain. The IMF cut its GLOBAL growth rate to just 3.3 percent for this year. It would be the slowest annual growth since 2009. IMF economic counselor Olivier Blanchard warned US and European policymakers it's up to them to find a solution. (SOUNDBITE) (English) IMF ECONOMIC COUNSELOR AND DIRECTOR OF RESEARCH DEPARTMENT OLIVIER BLANCHARD SAYING: "In advanced economies, growth is now too low to make a substantial dent in unemployment and in major emerging economies, growth which had been strong earlier has also decreased." The downgrade comes as jobless numbers continue to grow across Europe. 1 in 4 Spaniards is now out of work. Unemployment in France is now over 3 million after sixteen consecutive months of increase. And says Jeremy Batstone Carr from Charles Stanley, growth could be even lower than predicted. SOUNDBITE (English) JEREMY BATSTONE CARR, DIRECTOR PRIVATE CLIENT RESEARCH, CHARLES STANLEY, SAYING: "I think that we do have to fear that a recovery is a long way off. The IMF's annual outlook is really quite disappointing and may very well be rather over-egging the pudding. In actual fact the eventual outturn for activity could be significantly below even the IMF's forecasts now which themselves have been cut." It's the second time since April the IMF has cut its global growth forecast. While other governments in Europe are adjusting policies - Britain's standing firm. And the party conference slogan, at least, insists it can deliver. Ivor Bennett, Reuters