This letter appeared in the FT yesterday and is worth re-printing in full. It is a salutory reminder of the dangers of putting too much faith into supposedly infallible institutions such as the IMF.
From Prof Simon Mohun.
Sir, Your front page (“Pressure mounts on Labour as IMF lauds coalition’s deficit cuts”, September 28) gave prominence to the IMF’s report on the UK economy, reporting a verdict that the government’s deficit-cutting strategy “greatly reduces the risk of a costly loss of confidence in fiscal sustainability and will help rebalance the economy”. It’s not obvious that George Osborne is wise to feel so pleased.
After all, this is the same IMF that wrote in April 2006, “… dispersion of credit risk by banks to a broader and more diverse group of investors, rather than warehousing such risk on their balance sheets, has helped to make the banking and overall financial system more resilient … Consequently, the commercial banks … may be less vulnerable today to credit or economic shocks (Global Stability Report).
School of Business and Management,
Queen Mary University of London, London E1, UK