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IMF predicts more tough times for UK economy -

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IMF predicts more tough times for UK economy

The World Today - Thursday, 23 April , 2009 12:38:00

Reporter: Emma Alberici

PETER CAVE: On the International Monetary Fund statistics Australia is in much better shape than
Britain. The IMF says the British economy is set to shrink by 4 per cent this year and that it
won't emerge from recession until at least 2011.

The Chancellor of the Exchequer has delivered the worst set of budget figures in the UK's post-war
history and has tried to talk up the prospects for the economy even as it goes further into debt.

Emma Alberici reports from London.

EMMA ALBERICI: The Chancellor admitted that he'll need to borrow 175-billion pounds this year -
$AU355-billion - to steer Britain out of the deepest recession since 1945. Put into some context,
Australia's debt, as a percentage of national income, is 13 per cent. In Britain it's now 59 per
cent. By 2013 it will reach 80 per cent.

All the more stunning when you consider that the Prime Minster Gordon Brown when he was Chancellor
set a rule that the figure should only ever be allowed to get to half of that.

The UK's Finance Minister is now Alistair Darling.

ALISTAIR DARLING: I expect the economy to start growing again towards the end of this year.

EMMA ALBERICI: Exactly an hour after the Chancellor uttered those words, the International Monetary
Fund put its two pence worth into the mix. Contradicting the Government's assessment of the British
economy, the IMF said it would shrink by 4.1 per cent this year and that it wouldn't grow again
until at least 2011.

This Budget could be Labour's last with a general election looming. According to the polls, the
next prime minister will be David Cameron. He told the House of Commons that Britain could no
longer afford the black hole that the Brown Government had plunged the UK into.

DAVID CAMERON: This Chancellor, this Chancellor has just told us he is planning to borrow
348-billion pounds over the next two years. That is more, over just two years, than every previous
government put together. Every government since the Bank of England was first founded more than 300
years ago.

EMMA ALBERICI: Alistair Darling called it the world's first ever carbon budget with a legally
binding commitment, the highest so far, to reducing greenhouse gas emissions by 34 per cent
compared to 1990 levels by 2020. That's more than twice as much as Australia is aiming for.

Doug Parr is policy director of Greenpeace.

DOUG PARR: The Climate Change Act says that we have budgets that we have to meet. These are revised
as we go along every few years to keep us on track to an 80 per cent reduction in carbon dioxide
emissions by 2050.

EMMA ALBERICI: What happens if the target isn't met, given this is an act of legislation?

DOUG PARR: Well it means in effect the Government has to take itself to court (laughs).

EMMA ALBERICI: And what is the likelihood of that?

DOUG PARR: It's very unlikely that that's actually going to happen.

EMMA ALBERICI: The Budget allocated one-billion pounds, $AU2-billion, to offshore wind farms, a
rebate scheme for people wanting to buy energy-efficient cars and a feasibility study for up to
four large scale carbon capture and storage facilities.

This is Emma Alberici in London for The World Today.