Government should heed IMF’s warning on the housing market

The IEA comment on the IMF’s assessment of the UK economy

Commenting on George Osborne's response to the IMF’s assessment of the state of the UK economy, Mark Littlewood, Director General of the Institute of Economic Affairs, said:

“It is a welcome relief that the IMF has abandoned its call for looser UK fiscal policy. There is now overwhelming evidence that government spending restraint need not harm economic growth, and the Fund has been behind the curve as well as flip-flopping on this issue. The UK economy has grown healthily since the government ceased raising taxes but began cutting day-to-day government spending. With government borrowing still at around £100 billion per year, much more in the way of spending cuts will be needed in the next Parliament.

“The IMF are right to identify the housing market as a key structural problem. However, it is irresponsible to stoke demand for housing when land-use planning fundamentally restricts the new supply we so desperately need.

“If the government fail to fundamentally liberalise planning restraints, they risk destroying the dreams of those who want to afford to own their own homes, driving up the cost of living, and choking off growth in the most successful parts of the UK.”

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Notes to editors:

The mission of the Institute of Economic Affairs is to improve understanding of the fundamental institutions of a free society by analysing and expounding the role of markets in solving economic and social problems.
 

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