In a stark warning, IMF mission chief to the UK Ajai Chopra says as the UK debt reaches 100 per cent GDP it will find it harder to raise money in the capital markets.
He also echoed the recent warnings of Bank of England governor Mervyn King and told the Government that it must speed up its debt repayment plans.
Chopra says: “The liabilities in the UK are quite sizable and both the Government bond market and the foreign exchange market conditions currently suggest that the UK is being given the benefit of the doubt, but this benefit of doubt will not last forever.
Chopra says the Government must not test the limits of the market’s confidence, and instead begin working on reducing national debt in earnest.
He says: “Policies will have to focus on being consistent and concentrating on the downside risks, in order to make sure that market confidence is maintained.”
Chopra says to do this the authorities have to move more aggressively in their fiscal consolidation plans, faster than is envisaged in the 2009 budget.