BoE's Fisher says UK economy "basically flat" in 2012

LONDON, Oct 9 (Reuters) - British economic output is likelyto be "basically flat" this year, but should strengthen as lowerinflation boosts consumers' disposable income, Bank of Englandpolicymaker Paul Fisher said on Tuesday.

Fisher, in an inteview with BBC Radio Scotland, also saidBritain needed to maintain a fiscal policy that retained marketconfidence, but added that there was scope for political debateabout how exactly that should be done.

"They do have to keep a credible programme for the fiscalfinances so that markets believe that they are going to repaytheir debt. As long as they do that there is plenty of room fordebate between the political parties," Fisher said.

Earlier on Tuesday the International Monetary Fund said thatfinance minister George Osborne may need to defer some spendingcuts planned for next year if the economy proves much weakerthan expected.

The opposition Labour Party has called for a slow pace ofreduction to Britain's large budget deficit.

The IMF made its comments shortly after sharply cutting itseconomic forecasts for Britain, predicting a 0.4 percentcontraction this year and 1.1 percent growth in 2013.

(Reporting by David Milliken and Sven Egenter)

((david.milliken@reuters.com; +44 20 7542 5109; ReutersMessaging: david.milliken.thomsonreuters.com@reuters.net))