IMF praises Gordon Brown and backs Labour’s approach to economic stimulus

By Alex Smith / @alexsmith1982

The managing director of the IMF, Dominique Strauss-Kahn, has today backed Gordon Brown’s fiscal stimulus policy, agreeing with Labour that it must not be withdrawn too soon.

Speaking at the CBI, Struass-Kahn said the world owes a debt of gratidtude to the Prime Minister for the way he has handled the economic crisis.

He added:

“We recommend erring on the side of caution, as exiting too early is costlier than exiting too late”

The PM, speaking at the same conference, told delegates that he and every other major economy, the G20 and the EU all agree that:

“choking off recovery by turning off the life support prematurely would be fatal to world growth. It would be fatal to British jobs, British prosperity, and British growth and to our capacity to grow not just for now but for years.”

Nick Clegg also warned against cutting spending early:

“It is important that we do not put the long-term future of Britain in jeopardy by cutting back capital spending. It would be, in my view, a false saving, costing less today but costing everybody more tomorrow. Infrastructure is crucial to the competitiveness and growth of business.”

David Cameron remains out on his own in the view that spending cuts should be enacted immediately to curb national debt. He said at the conference that the budget deficit must be brought down quickly:

“Tackling the deficit is not an alternative to economic growth – it is a big part of it.”

ConservativeHome this morning had a banner demanding Cameron “cut deep, cut early”. It is a position widespread in their party, but one that is thankfully coming under increasing economic scrutiny.