The Government's austerity package remains "the right thing to do", the head of the International Monetary Fund said today in a boost
for Chancellor George Osborne.

Christine Lagarde gave her firm backing to maintaining the deficit-cutting measures, despite the threat of recession and economic forecasts being revise downwards.

Figures released on Wednesday showed the economy shrank by 0.2% in the final quarter of last year - slightly more than anticipated and fuelling Labour calls for a change of course.