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Lagarde: It makes me shiver to think what would have happened had Osborne not taken charge.

By Paul Goodman
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Rejoicing in the Treasury!  Take that, Ed Balls!

Christine Lagarde, the IMF Managing Director, has pronounced on the Government's economic strategy:

‘The gain that resulted from the fiscal consolidation that was decided over two years ago has been that result – the credibility of the UK Government and its ability to borrow at extremely favourable rates. Sometimes you feel like you could look back and wonder ‘what if’. And when I think back myself of May 2010 when the UK deficit was at 11%, and I try to imagine what the situation would be like today if no such fiscal consolidation programme had been decided. I shiver."

It's not exactly the Relief of Mafeking, but Ms Lagarde's emphatic re-endorsement of Plan A has the Treasury cheerleaders up and about and tweeting all over the place.  Here's Matthew Hancock (whose just been making the Government's case on the Daily Politics).  And here's Claire Perry.

The Chancellor will do his Fat-Boy-from-Pickwick best to make "your fresh creep" with the "I shiver" bit of Ms Lagard's remarks.  Indeed, he's already at it in an article for the Evening Standard:

Now Mr Balls is in opposition and he says the Government should “heed the advice of the independent IMF”. So what is its advice today? It starts by stating that decisive action to tackle the record budget deficit that this Government inherited is “essential” and that “substantial progress” has been made. When asked this morning what might have happened if this Government had not acted to deal decisively with the deficit, Mme Lagarde’s answer was stark: “I shiver.” I couldn’t agree more.

And Mr Osborne has indeed had more good news today with inflation at 3% ("sparing the Governor of the Bank of England the embarrassment of his tenth consecutive letter of explanation," as Jeremy Warner puts it over at the Telegraph), plus better news on borrowing and a helpful report from the OECD.

Mr Balls will scrape together whatever ammunition he can from the meagre pickings offered to him by the IMF report.  The Chancellor is a long way from being out of the woods yet.  But I can't really blame him for making the most of Ms Lagarde's words.  And it is cetainly hard to grasp the logic of the Shadow Chancellor's argument that the deficit is best dealt borrowing more.

Oh, and for those who question my rough headline precis of what Ms Lagarde said, the answer is: that's how her words will be read, for better or worse.


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