By Marcus Leach
The International Monetary Fund (IMF) has warned that the UK economy is still a long way from 'a strong and sustainable recovery'.
The warning comes as part of their closing statement following the mission to the UK. The IMF went on to say that current austerity measures were acting as a drag on the economy.
The government could do more to offset the negative impact of austerity with infrastructure spending, it said.
"Notwithstanding the recent uptick in activity, per capita income remains 6 percent below its pre-crisis peak, making this the weakest recovery in recent history. Of particular concern is that capital investment (as a share of GDP) is at a postwar low, and that youth unemployment is high," said the IMF.
Richard Driver of Caxton FX agreed that more needed to be done to promote growth in the UK.
"The IMF are absolutely right; more definitely needs to be done to stimulate UK growth. The economy has been crying out for infrastructure spending for some time now," he said.
"Growth promoting measures needn’t replace Osborne’s commitment to austerity but can be run alongside. Admittedly, Osborne may need to slow austerity in the near-term, but this doesn’t preclude him from delivering success in his objectives in the long-term.
"This isn’t the most scolding of IMF reports and Osborne won’t be panicked into action, particularly in light of improved UK economic figures over the past couple of months.
"However, the report does ramp up the pressure and puts the government back under the microscope; I suspect a change of path will come but we will inevitably have to be patient."
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