The International Monetary Fund (IMF) has come out in support of the chancellor George Osborne’s austerity measures and said that his plans to reduce the deficit should be stuck to. However, in its annual assessment of Britain’s economy, the IMF admitted that the recovery in the UK was not as strong as it had hoped. The fund said the chancellor should only ease the pace of spending cuts or postpone tax increases if “the economy experiences a prolonged period of weak growth and high unemployment”. On the threat of growing inflation, John Lipsky, the acting managing director of the IMF, said: “This raises the question whether it is time to adjust macroeconomic policies. The answer is no as the deviations are largely temporary. “The stability and efficiency of the UK financial system is a global public good due to potential spillovers and thus requires the highest quality of supervision and regulation." Lipsky proposed "temporary tax cuts" aimed at low income households if weak economic growth and high unemployment persist. The IMF predicted that the UK economy would grow by 1.5% in 2011, down from its forecast of 1.7% in April and 2% in November 2010. But it maintained its medium term forecast at 2.5%.