IMF warns of the 'human cost' of public spending cuts

[CHIMO]

The International Monetary Fund undermined the main thrust of the UK coalition's economic strategy today after it warned western governments that they risked holding back the recovery and creating a massive pool of disaffected labour if they pursued draconian cuts in spending.

IMF director general, Dominique Strauss-Kahn, told a conference in Oslo that governments needed to identify ways to generate employment to prevent a generation of workers losing their skills and joining the long-term unemployed. He said cuts in public spending had a "human cost" and could result in "tragedy" for millions of young people.

His speech will add to pressure on the chancellor, George Osborne, after the Organisation for Economic Co-operation and Development (OECD), the rich nations' thinktank, said last week that cutting budget deficits this year risked derailing economic recovery.

Analysis by the IMF and the OECD is expected to feature in campaigns by trade unions and rivals for the Labour leadership at the TUC conference this week.

http://www.guardian.co.uk/business/2010/sep/13/imf-public-sector-cuts