Tory election boost as Lagarde and Schauble praise UK economy

The Conservatives have received a double pre-election boost, with the head of the International Monetary Fund and the German finance minister praising Chancellor George Osborne's economic management.

The endorsement by IMF managing director Christine Lagarde came a day after her organisation predicted that the British government would not balance the books by 2020, whoever wins the May 7 general election, dealing a blow to both major British political parties, which have promised to eliminate the deficit during the next parliament.

Speaking in Washington on a panel with Mr Osborne at the IMF and World Bank spring meetings, Ms Lagarde said that while global growth was "not good enough", "the UK is holding strongly".

She added: "It's obvious that what happened in the UK has actually worked", in reference to balancing austerity and promoting growth.

Separately, Wolfgang Schauble, the German finance minister, said that while he did not like to comment on other EU member states, he praised the chancellor: "The UK has done a very good job in the last few years and Osborne has a very good plan for the future."

The IMF said in its fiscal monitor report on Wednesday that UK tax revenues will fall short of the Office for Budget Responsibility's expectations and the next government will be forced to spend more than either of the main political parties are currently planning, meaning the £90bn deficit will not be eliminated.

The Conservatives have predicted that in 2018-19 the deficit would "move into surplus with the government taking in more than it is spending for the first time in 18 years". Labour has also promised to eliminate the deficit by the end of the next parliament, but not as quickly as the Tories.

The Tories dismissed the IMF's forecasts as less reliable than the OBR's.

In its forecasts, instead of the deficit moving from £90bn (5 per cent of national income) in 2014-15 to a surplus of £7bn in 2019-20 (0.3 per cent of GDP), the IMF projects a deficit of £7bn in 2019-20, some £14bn worse than Mr Osborne's Budget forecasts, representing a shortfall of 0.6 per cent of GDP.

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