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

LONDON, Oct 9 (Reuters) - British economic output is likely to be "basically flat" this year, but should strengthen as lower inflation boosts consumers' disposable income, Bank of England policymaker Paul Fisher said on Tuesday.

Fisher, in an inteview with BBC Radio Scotland, also said Britain needed to maintain a fiscal policy that retained market confidence, but added that there was scope for political debate about how exactly that should be done.

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

Earlier on Tuesday the International Monetary Fund said that finance minister George Osborne may need to defer some spending cuts planned for next year if the economy proves much weaker than expected.

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

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

(Reporting by David Milliken and Sven Egenter)

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

Keywords: BRITAIN BOE/FISHER