The International Monetary Fund (IMF) underestimated the economic rally in the United Kingdom and the effects of the ongoing austerity program. “We got it wrong,” according to IMF managing director Christine Legarde on the “Andrew Marr Show.”
The IMF has warned against deep cuts is fiscal policy, known as austerity, and tried to program neo-Keynesian debt swelling balance sheets. “We acknowledged it. Clearly the confidence building that has resulted from the economic policies adopted by the government has surprised many of us,” she continued. This comes a year after the IMF’s chief economist Oliver Blanchard said cuts to the budget were equivalent to “playing with fire.”
Lagarde did point to the housing market as a continued threat to the United Kingdom’s economic recovery. Although housing have slightly moved lower, housing prices remain in double-digit gains nearing 20 percent. The housing sector swell is causing concern and much debate on when to increase the benchmark rate from .5 percent.