By Ed Conway, Economics Editor, in Washington
The International Monetary Fund's chief economist has warned George Osborne that he is "playing with fire" with his fiscal policy.
In an interview with Sky News, Olivier Blanchard also said that the Chancellor should have changed his austerity strategy at the Budget last month.
The comments came as the IMF unveiled new forecasts which showed a dramatically weaker outlook for the British economy.
Asked about Britain's prospects, Mr Blanchard said: "I think conditions have deteriorated. There is no question that the fiscal plan - which was designed a few years back - was assuming that private demand would be stronger than it is.
"So the question is what do you do? Well the first line of defence is you let the so-called automatic stabilisers play.
"That has been done, that's good. But then at some stage you actually have to sit down and say: do we continue?
"The danger of having no growth, or very little growth, for a long time is very high; you get a number of vicious cycles which come into play… the result is that [people] don't spend, output is low.
"And I think you're playing with fire when you get to very low growth rates so... if you can decrease the speed of fiscal consolidation maintaining the credibility (so it's not a question of whether, it's a question of when), when growth is close to zero I think yes it's worth considering."
Asked whether Mr Osborne had wasted the opportunity of the Budget, Mr Blanchard said: "Well, 'waste' is too strong, but they surely could have done more, yes."
The comments are likely to infuriate the Treasury, which has insisted that its austerity plan is the only sensible course for the UK, and that Mr Blanchard is wrong.
The chief economist said his response to this was: "That I think that I am right and they are wrong."
The comments come after the IMF said that Britain's economy would grow by a mere 0.7% this year and by 1.5% in 2014.
That is a 0.3 percentage point cut for each year.
The combined cut for the two years is greater than for any other leading economy, including the US, Italy and Spain.
Although the 2013 forecast is marginally stronger than that of the Office for Budget Responsibility's 0.6%, the 2014 forecast is markedly weaker than the OBR's 1.8%.
It came as the IMF warned in its closely-watched World Economic Outlook report that the world economy was in danger of moving from being a "two-speed economy" to a "three-speed economy" as the US picks up pace and Europe is left behind.
The Fund also put pressure on the Bank of England to consider more radical action to kick-start the economy, pointing out that the impact of the Funding for Lending Scheme "has been limited, encouraging mortgage lending more than lending to small and medium-size businesses".
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