“Fiscal commitments would be strengthened by targeting a more ambitious medium-term fiscal adjustment path for implementation once the economic recovery is established,” the IMF said. “The focus of this adjustment profile should be to put public debt on a firmly downward path faster than envisaged in the 2009 Budget.”

The Treasury expects the budget deficit to reach 12.4 percent of gross domestic product in the year that began April 1 as the worst recession since World War II ravages tax receipts and destroys jobs.

Debt may total 1.4 trillion pounds (US$2.2 trillion) by 2014, and in his budget last month Darling announced a spending squeeze and higher taxes that will boost Treasury coffers by almost 27 billion pounds a year. Current spending growth will be limited to 0.7 percent more than inflation from 2011.

The IMF urged the government to build “a broad consensus on the critical need for sizeable fiscal adjustment” through tax increases and spending restraint.

The Treasury said it welcomed the IMF’s assessment and would “note” the advice.

Source: Bloomberg