By . Daniel Martin, Whitehall Correspondent . Warning: IMF chief Christine Lagarde urged Chancellor George Osborne to take action to prevent a property bubble posing a risk to the economy . Britain should relax planning laws to build more houses on green field sites, impose VAT on food and raise interest rates to protect the recovery, said the International Monetary Fund. The global financial watchdog warned the Chancellor that rate rises and a sharp increase in new housing were needed to prevent a property bubble posing a risk to the economy. And it suggested that, to reduce public debt, VAT could be levied for the first time on books, children’s clothes and more types of food. The intervention infuriated Tory MPs, who said Britain’s tax and planning policies were nothing to do with the IMF, or its head Christine Lagarde. ‘We elect our own government to decide on our budget thank you very much,’ said Douglas Carswell, Tory MP for Clacton. Miss Lagarde said the Bank of England should start to put up interest rates and take measures to clamp down on risky mortgages. And she called for ‘unnecessary’ restrictions on building on greenfield sites to be lifted, so the supply of houses can be increased. This, she said, would help stabilise prices. In addition, the IMF’s annual economic health check for Britain said the Government could better tackle debt by reducing the scope of products and services that are zero-rated for VAT. The IMF lecture comes just days after the European Commission called on Mr Osborne to boost economic growth by imposing higher taxes and new levies on expensive homes. The IMF’s report urged ministers to consider an early end to the Help to Buy scheme offering mortgage guarantees and loans for those struggling to find a deposit. In response, the Chancellor said the UK would ‘remain vigilant’ for any risks that might emerge from the housing market. Action: The IMF said Britain should relax planning laws to build more houses on green field sites, impose VAT on food and raise interest rates to protect the recovery. Above, Miss Lagarde is pictured with Mr Osborne . George Osborne earlier told BBC Radio 4’s Today programme the Bank ‘should not hesitate’ to take action if the housing market poses a risk to the economy. David Cameron’s hopes of stopping an arch-federalist taking the reins of the EU have suffered a blow after Miss Lagarde ruled herself out as a compromise candidate. She insisted: ‘I am not a candidate. I have a job.’ Mr Cameron has made clear his opposition to front-runner Jean-Claude Juncker, the ex-Luxembourg prime minister. Opposed: David Cameron's hopes of stopping an arch-federalist taking the reins of the EU have suffered a blow after Miss Lagarde ruled herself out as a compromise candidate. He has made clear his opposition to front-runner Jean-Claude Juncker, the ex-Luxembourg prime minister. Above, Mr Cameron and Mr Juncker . His hopes now rest on  Lithuania’s president Dalia Grybauskaite and Helle Thorning-Schmidt, the Danish prime minister and daughter-in-law of former Labour leader Lord Kinnock. Last night German magazine Der Spiegel quoted aides to Herman Van Rompuy, president of the European Council, saying they believed the opposition to Mr Juncker means he will withdraw from the race.
IMF chief Christine Lagarde urges lifting of restrictions on homebuilding .
Also believes VAT should be imposed on food and interest rates raised .
Intervention has infuriated Tory MPs who said Britain's tax and planning politices were nothing to do with IMF or Miss Lagarde .
By . Daniel Martin, Whitehall Correspondent . Warning: IMF chief Christine Lagarde urged Chancellor George Osborne to take action to prevent a property bubble posing a risk to the economy . Britain should relax planning laws to build more houses on green field sites, impose VAT on food and raise interest rates to protect the recovery, said the International Monetary Fund. The global financial watchdog warned the Chancellor that rate rises and a sharp increase in new housing were needed to prevent a property bubble posing a risk to the economy. And it suggested that, to reduce public debt, VAT could be levied for the first time on books, children’s clothes and more types of food. The intervention infuriated Tory MPs, who said Britain’s tax and planning policies were nothing to do with the IMF, or its head Christine Lagarde. ‘We elect our own government to decide on our budget thank you very much,’ said Douglas Carswell, Tory MP for Clacton. Miss Lagarde said the Bank of England should start to put up interest rates and take measures to clamp down on risky mortgages. And she called for ‘unnecessary’ restrictions on building on greenfield sites to be lifted, so the supply of houses can be increased. This, she said, would help stabilise prices. In addition, the IMF’s annual economic health check for Britain said the Government could better tackle debt by reducing the scope of products and services that are zero-rated for VAT. The IMF lecture comes just days after the European Commission called on Mr Osborne to boost economic growth by imposing higher taxes and new levies on expensive homes. The IMF’s report urged ministers to consider an early end to the Help to Buy scheme offering mortgage guarantees and loans for those struggling to find a deposit. In response, the Chancellor said the UK would ‘remain vigilant’ for any risks that might emerge from the housing market. Action: The IMF said Britain should relax planning laws to build more houses on green field sites, impose VAT on food and raise interest rates to protect the recovery. Above, Miss Lagarde is pictured with Mr Osborne . George Osborne earlier told BBC Radio 4’s Today programme the Bank ‘should not hesitate’ to take action if the housing market poses a risk to the economy. David Cameron’s hopes of stopping an arch-federalist taking the reins of the EU have suffered a blow after Miss Lagarde ruled herself out as a compromise candidate. She insisted: ‘I am not a candidate. I have a job.’ Mr Cameron has made clear his opposition to front-runner Jean-Claude Juncker, the ex-Luxembourg prime minister. Opposed: David Cameron's hopes of stopping an arch-federalist taking the reins of the EU have suffered a blow after Miss Lagarde ruled herself out as a compromise candidate. He has made clear his opposition to front-runner Jean-Claude Juncker, the ex-Luxembourg prime minister. Above, Mr Cameron and Mr Juncker . His hopes now rest on  Lithuania’s president Dalia Grybauskaite and Helle Thorning-Schmidt, the Danish prime minister and daughter-in-law of former Labour leader Lord Kinnock. Last night German magazine Der Spiegel quoted aides to Herman Van Rompuy, president of the European Council, saying they believed the opposition to Mr Juncker means he will withdraw from the race.
Warning: IMF chief Christine Lagarde urged VAT on food and raise interest rates to protect infuriated Tory MPs, who said Britain’s tax and planning policies were nothing to do with the