IMF warns on unemployment

Economic confidence may have bounced since the lows of September last year and March this year but unemployment is still rising.

The rate of increase may have reduced but it is too early to say that the importance of this issue should be downgraded. That is why economic stimulus packages must remain in place. And that is why Conservative Party calls for public spending cuts now imply taking risks with the UK economy.

The head of the IMF, Dominic Strauss-Kahn, named rising unemployment the 'third wave' of the economic crisis. The first two waves were 'the financial crisis and the consequent global economic crisis.' He was speaking after the G20 conference in London this weekend. Referring to crisis response plans, he said that 'even if we need to discuss our exit strategy, it's not the time to implement it.' He did state that governments should prepare the public for exit plans.

Of course just because the IMF says something doesn't mean it is right (people should remember that when it makes economic forecasts). But these comments do echo the Bank of England Governor's concerns about the fragility of any signs of economic recovery at this stage.

There is still a need to focus on tackling rising unemployment.

Stephen Beer, 07/09/2009

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