The managing director of the International Monetary Fund has raised doubts over the validity of Alistair Darling's Budget forecasts this week, declaring that the figures may have been intentionally over-optimistic, The Telegraph reports.
In comments which will further undermine the forecasts that underlie last week's Budget, Dominique Strauss-Kahn said that the Chancellor may have decided to claim that the economic recovery would arrive towards the end of this year in an effort to prevent confidence from collapsing further. The reality, he added, may well be different.
The Chancellor last week slashed his Budget forecasts for UK economic growth this year from -1pc to -3.5pc, the worst year for the UK economy in post war history. However, only two days after the projections were issued, the Office for National Statistics revealed that the economy shrank by 1.9pc in the first quarter of 2009. Britain's gross domestic product has shrunk at the fastest rate since 1948 in the first six months of the year.
The IMF not only forecasts that the economy will shrink by 4.1pc this year, but also - in spite of Mr Darling's hopes of returning to economic growth before the end of the year - that the UK will contract by 0.4pc next year. Full story...
THE TREASURY IS PREPARING to sell part of Northern Rock back to the private sector this year in an attempt to generate a return for taxpayers from the bank's nationalisation, writes The Telegraph.
Meanwhile, Jon Wood, the hedge fund manager whose firm, SRM Global, owned 11.5pc of Northern Rock when it was nationalised, has mounted an savage attack on the Government's handling of the banking crisis.
In an interview with The Daily Telegraph, Mr Wood said the Treasury had "stolen" the controlling stakes it took in several banks. When these holdings are refloated, the Government will make "billions and billions and billions," Mr Wood said.
The Government is keen to realise value from at least part of its portfolio of banking stakes before the next general election and has asked investment bank Credit Suisse to look at ways of re-privatising Northern Rock, which was nationalised in February. Full story...IFAonline
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