We aren’t a warring couple – PM and Clegg

 
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Britain's economic growth prospects for this year have collapsed, leading economists warned today.

In a bleak forecast, the International Monetary Fund slashed its prediction for growth in the UK to 0.2 per cent for 2012. This compared to a prediction of 0.8 per cent in April.

It is a huge blow to Chancellor George Osborne as he seeks to shake off growing criticism over the "omnishambles" Budget.

It also came as David Cameron and Nick Clegg stood side by side and denied being a "warring couple". They announced that a major update to the Coalition agreement will come out this summer. Tory and Liberal Democrat MP began frenetic attempts to influence a document that looks set to become the policy blueprint for government until a 2015 election.

The IMF’s downgrade for Britain, which is in the grip of a double-dip recession, was worse than other major economies surveyed, according to reports. Labour highlighted that the IMF had now scrapped earlier predictions for the UK - of 1.6 per cent growth last September and 2.3 per cent three months earlier. A Labour source said: "How much worse do things have to get before David Cameron and George Osborne finally act? There can no longer be any excuses for delay.

"We need a change of course and urgent action now to boost the economy.  If we fail to act now, and we see years of slow growth and high unemployment being entrenched, Britain will pay a heavy long term price."

The Treasury swiftly blamed the eurozone crisis for dragging down the British economy. A spokesman said: "Because the euro area is the UK largest trading partner we are now feeling the effect across our economy.  But we are not powerless to act: the Bank of England are taking coordinated action to inject new confidence and support the flow of credit to where it is needed in the real economy." The IMF also cut its forecast for the UK for next year, by 0.6 per cent to 1.4 per cent.

The PM and his deputy announced an updating of the Coalition agreement. today during a Cabinet awayday. Despite clear divisions between their MPs, they stressed their determination to govern until 2015.  Mr Clegg sounded conciliatory on Lords reform, describing last week's revolt as "a bump in the road" rather than a deal-breaker.

Mr Cameron said it was "vital that the Government has the majority, the decisiveness and the strength" of both parties to maintain stability in the face of a global economic crisis. "Does anyone think we would be better off with a minority administration that could not deliver its decisions?" he demanded, in a clear challenge to Tories calling on him to break up the power-sharing deal. He added: "I believe it has real purpose, a real mission."

Mr Clegg, whose red tie contrasted with the PM's blue number, said Lords reform made Westminster "hot under the collar" but stated firmly : "None of that will stop us continuing to govern in the national interest for the whole country. We will not lose our nerve."

However, Mayor Boris Johnson predicted the partnership would break up "before 2015 ... Logically it must be true that at some stage before 2015 there will have to be a decision to part company and campaign on different perspectives," he said.

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