IMF Heads to UK, Declares Economy 'Not Actually a Sinking Ship'—New Motivational Finance Techniques Surging!

The International Monetary Fund, the body that lends money to countries in trouble and then explains what they did wrong, has spent the last day praising the UK. Three times in 24 hours, senior officials applauded government plans to reduce the country’s annual borrowing. Anyone who has followed British economics for the past few decades will find this unsettling, the way a dog finds it unsettling when the vet suddenly starts being nice.

Here is the mechanism, as far as anyone can tell. Annual borrowing is the gap between what the government spends in a year and what it collects in tax. Shrinking that gap means less new debt piling on top of the old debt. For you, the effect is indirect. If the government borrows less, it has less need to tempt lenders with higher interest rates (the price of borrowing money), and that can eventually filter into mortgage and savings rates. Eventually is doing a lot of work in that sentence.

What this episode really reveals is a new technique in the motivational speech. Global finance has discovered that a sinking ship can be redescribed as a ship with a leak under active management, provided the speaker is confident enough and the audience is tired enough. Expect the phrase ‘structurally resilient’ to appear on a coffee mug by Friday.

So what should you do? Nothing dramatic with your savings. Check your pension, keep three to six months of expenses in an easy-access account, and when someone in a good suit tells you the economy is not sinking, count the lifejackets yourself.