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Recovery `hampered by high household debt`

By Joel Stanier - Financial specialist

2 June2009

The International Monetary Fund (IMF) has warned that Britain`s economic recovery is being slowed by high levels of household debt.

As The Times reports, the IMF has praised the `aggressive` action which the Government has taken to address the crisis. It stated that `the pace of the slump` seems to be easing - but that recovery will occur only gradually, as the economy is still vulnerable.

It warned that the recovery was being hampered by the high levels of household debt.

"Faced with falling house prices, significant reductions in the value of pensions and other assets, a deteriorating and uncertain employment outlook, consumers are likely to retrench spending to reduce debt and rebuild savings," it stated.

It also urged the Government to take steps to cut its own debt more rapidly, suggesting that spending cuts were `more durable` than tax rises when it comes to reducing public borrowing.


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