International Monetary Fund's comments back the Bank of England's programme of quantitative easing

Britain will face credit rationing or higher interest rates unless the Bank of England continues its emergency money creation programme to support growth, the International Monetary Fund warned today.

Highlighting the risk of a £180bn funding gap in 2010, the IMF said there was a "significant tension" between the supply of finance from a weakened banking sector and rising demands for funds, primarily caused by the soaring government deficit.

José Viñals, the IMF's financial counsellor, said that despite avoiding a global meltdown, the shortage of credit and the pressures on government finances posed risks to recovery.

Launching the fund's half-yearly Global Financial Stability Report (GFSR), he said the UK was likely to face "difficulties" in meeting the demand for credit.

"Either there will have to be continuing support on the part of the authorities to underpin the credit process or there will be higher lending interest rates, or credit will be constrained."

The comments provided clear support for the Bank of England's programme of quantitative easing (QE), which is designed to compensate for the inability or unwillingness of banks to lend.

For the first time since the financial crisis began in August 2007, the fund cut its estimate of the write-downs facing banks and other financial institutions. In the spring it predicted a $4tn bill (£2.5tn) but has now pared this back to $3.4tn.

"Over a year has now passed since the Lehman Brothers bankruptcy prompted a potential global financial meltdown," said Viñals. "Fortunately, the situation is very different today due to unprecedented policy actions and the overall improvement in economic conditions. We are on the road to recovery, but this does not mean that risks have disappeared."

Viñals added that countries such as Britain, which had high levels of debt relative to the size of the economy, were particularly vulnerable to higher long-term interest rates because of fears about the sustainability of the public finances.

In August the Bank of England increased the QE budget to £175bn, following a meeting where the governor, Mervyn King, was outvoted in his attempt to raise the ceiling to £200bn. Discussions continue within the Bank on what additional measures – possibly extra quantitative easing or even negative interest rates – it could take in the future.

Although Viñals' comments do not amount to an explicit call for more QE, they do indicate that the IMF would not stand in the way of an enhanced programme by the Bank of England to increase credit availability.

David Miles, a member of the Bank's monetary policy committee, told a conference in Belfast this morning that QE was having an impact, although it was hard to say how much exactly. Miles added that he saw little reason to proceed particularly cautiously with QE as the policy was "not irreversible".

Debt-laden Brits

The IMF's six-monthly snapshot of global financial conditions singled out the UK as the country most at risk from a potential dearth of funding, due to its weak banks and the need to finance the government's budget deficit. "In terms of regional vulnerability, the UK appears most susceptible to credit constraints ... given its significant reliance on the banking channel and the projected sharp decline in domestic bank balance sheets, as well as substantial public financing needs," said the GFSR.

The fund said the UK could be facing a funding gap of £180bn next year – 15% of gross domestic product – and far higher than the 2.4% projected for the United States and the 3% for the eurozone.

Britain and the United States' reliance on foreign investors to fund its budget deficit meant there was a risk of higher long-term interest rates and weaker currencies, the IMF stressed. "If foreign investors become concerned about long-term fiscal sustainability in these countries, interest rates on government securities would need to adjust higher and the exchange rate would depreciate."

The GFSR said US and UK banks had suffered most from the financial crisis that started in August 2007. Cumulative loss rates for the UK banking system between 2007 and 2010 are projected to be 7.3%, similar to the 8.1% in the US but much higher than the 3% in the eurozone.

Britain had seen house prices decline sooner than countries in the eurozone and UK consumers were more heavily reliant on credit card debt, the IMF said. It expects bad loans to be particularly heavy this year in commercial property and buy-to-let mortgages.

Despite lowering its estimate of total write-downs, the IMF added that the financial sector was only halfway through the write-down process, with American banks further advanced than those in Europe. US banks have recognised 60% of anticipated losses against 40% for banks in Britain and the eurozone.

Despite the rally in stockmarkets and the reduction in credit spreads in recent months, the IMF said it was too early to claim that the crisis was finally over. "The risk of a re-intensification of the adverse feedback loop between the real and financial sectors remains significant as long as banks remain under strain and households and financial institutions need to reduce leverage."

This month, like many other parents, Cherrill Hicks said goodbye to her son as he left home for university. She describes the pain of separation and her regret for deeds left undone

It's Monday morning and I'm weeping uncontrollably. Work, friends, home, all can go hang: I just want to curl up in bed. Our eldest boy, our firstborn, has left home to start his new life at university. And I feel as if bereaved - in physical pain.

There will be big plusses, I keep telling myself. I'll have a fighting chance of grabbing the remote and watching something other than X Factor or football. I can give up nagging about clothes scattered around the house; about damp towels and dirty cereal bowls left to moulder on his bedroom floor. No more mass catering and meat-heavy stodge, or having to turn out my purse for yet another tenner.

The last days before the move were so hectic, I didn't have time to feel much. Hours filled with trivia, spending too much money on 'essential' items: corkscrew, cutlery, toaster, bread knife, frying pan and a pot big enough to cook spaghetti (surely his hallmates will bring all these too?). A futile run to Ikea (hellish, and not half as cheap for saucepans or pillows as the pound shop down the road).

Then there was the food starter kit, to get him over the first few days: baking potatoes, cheese, tuna, orange juice (and the guilt, later, on seeing the other students' Waitrose takeaways in the communal fridge). The washing. The anxiety about whether his loan would come through (it didn't). Not much time to indulge in emotion.

Besides, I thought, he went to the other side of the world on his gap year. By comparison, Sheffield is just up the road.

On the motorway, our car is one of many stuffed to the gills with laptops and duvets, bikes strapped to the back. Then we're there, queueing up, parking near his hall, unloading the vehicle. Discreetly comparing our load with others': have we overdone it or not brought enough?

The halls of residence look attractive enough, surrounded by gardens, overlooking the city, pleasant in the sun. His room is anonymous but clean, an en suite (more than I ever had). The kitchen, shared with five others, is spacious and airy (and as predicted, contains six of everything).

We unpack and make up the bed while he bonds with the bloke in the room opposite (who, to my concern, is already glued to his X-box on a colossal monitor). Son seems keen for us to go. The next thing I know, we're all standing by the car saying goodbye in the sunshine. I don't cry as we hug, and only a bit as he turns on his heel towards his new home. The last image is of him at his window, waving until we are out of sight.

Back home, I visit his room. Never tidy, it now looks forlorn, dishevelled. The things he'd considered taking, then discarded, are scattered on the floor.

His dad starts talking about all the things he'd wanted to do with his boy but never got round to (or the invite had been flatly refused): bike rides, trips to Europe, visits to all the cathedrals in England (the ones he had been forced to see in his youth). Too late now, he seems to be saying.

That sets me thinking about how in the last few years, my relationship with my son had come to be dominated by my anxiety - over GCSEs, then A-levels, university applications, the gap year. How all our conversations seemed to focus on what he ought to be doing (revising, meeting coursework deadlines, writing his personal statement, applying for his loan). There always seemed so much to organise, that little time was left to simply be together. And now he's gone.

Of course, that's not the whole story. We had good times together. And he'll be back, probably quite soon and, possibly at some point, for a far longer period - by which time we'll have got used to his absence.

The following Saturday night, his dad and I find ourselves alone at home, watching TV: the X Factor (saddoes!) and, later, Match of the Day. So this is liberation?

Monday morning comes round and I'm feeling better. I haven't made too many calls. I just need to wean myself off texting every hour …

Security tightens in Beijing before 60th anniversary of communist rule

A lockdown is beginning in China's capital ahead of tomorrow's 60th anniversary of the founding of the People's Republic.

Hundreds of thousands will take part in massive parades by civilians and the military, who have been drilled so thoroughly that soldiers are only permitted to blink once every 40 seconds. A dazzling half-hour firework display, using 300,000 shells, will surpass even the pyrotechnic splendour of last year's Olympics, organisers promise.

As tanks roll through the heart of the city, and fighter planes zoom overhead, the People's Liberation Army will reveal 52 new types of weapon, including its latest nuclear missiles – all made in China.

But while 30,000 carefully selected guests will gather in Tiananmen Square, where Chairman Mao proclaimed the creation of the new China in 1949, millions of the city's inhabitants have been advised to stay at home.

"Police suggest that Beijing residents try not to go out on 1 October to avoid complications. The public is recommended to watch the celebrations live on TV," reported the official English language newspaper China Daily today.

Security is tighter than that surrounding the last military parade in 1999, possibly reflecting anxieties after the fatal outbreak of ethnic violence in the north-western region of Xinjiang this summer.

Residents along the route have been warned against inviting friends to their homes, and guests at a hotel in the centre were urged to remain inside from 4pm today to 7am on Friday if possible. Offices have been closed, and staff and residents warned not to open windows or watch the parade from their balconies.

Roads in the centre will be closed for almost the whole day tomorrow and Beijing's international airport will shut down for three hours.

An estimated 10,000 police and security guards and 800,000 volunteers have been visible on the streets for days. Supermarkets have been barred from selling sharp knives and kite-flying has been banned.

Security restrictions are in place far outside the capital. At the Three Gorges Dam in Hubei, vessels carrying "very dangerous" cargo have been banned from passing through the area for 10 days.

The media have been under tighter control, with stern injunctions not to play up bad news. One organisation reportedly set a quota of no more than 30% "negative" news.

And in Chongqing, couples will be unable to divorce on National Day, local media warned.

As usual in the run up to sensitive dates, petitioners who seek help from central authorities after problems with local officials have been swept out of the city and dissidents placed under house arrest or told to leave Beijing.

"What the Chinese government is highlighting is its own fear of giving the Chinese people a real voice to talk about the reality of their lives, good and bad," said Roseann Rife, Amnesty International Asia-Pacific deputy director, in a statement.

A propaganda and education briefing from the PLA logistics department, published in the PLA newspaper this year, described the parade as "a comprehensive display of the party's ability to rule and of the overall might of the nation".

But General Gao Jianguo, of the National Day military parade joint command, said the display of might was intended to celebrate the country's achievements, not to intimidate neighbours.

"A country's military ability is not a threat to anyone. What is important is its military policy," he said.

Five thousand soldiers will march past the country's leaders in the 66-minute parade, followed by 30 blocks of weapons.

According to Xinhua, more than 80,000 students will participate in celebrations, waving flowers and flipping coloured cards to create massive slogans such as "National Day" and "Long Live China".

Participants were ordered to sign secrecy agreements prohibiting them from talking to journalists, sending text messages and blogging about or posting photographs of rehearsals. Some who complained online about the curtailing of their summer holidays for enforced 12-hour rehearsals were reportedly contacted by police.

But Xinhua acknowledged their grievances in an article last week. One student said the order to participate had "screwed up all his summer plans". Another said: "There are many more ways to show our love for this country."

Peter Galbraith removed from UN post after pressing for inquiry into results heavily favouring Karzai

The most senior American diplomat at the UN mission in Afghanistan has been fired after he failed to secure support for a full and robust investigation into widespread fraud favouring President Hamid Karzai in the August presidential elections.

Peter Galbraith, the deputy UN special envoy responsible for electoral matters, was removed after a dispute with his Norwegian boss, Kai Eide, after Galbraith had taken an outspoken line over alleged vote-rigging in the 20 August election, a position that reportedly angered Karzai.

The spokeswoman for UN Secretary General Ban ki-Moon, Michele Montas, said in a statement yesterday that Ban had decided to recall Peter Galbraith and end his appointment as the UN's deputy special representative. Montas said the secretary-general reaffirmed his full support for Eide.

Arsala Jamal, a Karzai campaign official, said todayhe was aware of Galbraith's removal but called it an internal UN matter.

UN officials had previously acknowledged the dispute between Eide and Galbraith, who left the Afghan capital in mid-September. UN sources said Ban was persuaded to end Galbraith's mission after ministers in Karzai's government said they could no longer work with him. Confimation in New York of Galbraith's removal followed his emailed denial earlier in the day that he had been sacked.

Within hours of the news, a member of the UN's political affairs unit had resigned. Others are likely to follow among the diplomats who liked Galbraith personally and backed his tough approach to officials of the Afghan Independent Election Commission (IEC), who many believe are complicit in attempts to rubber-stamp a Karzai first round victory.

Sources say Galbraith was furious that the IEC first voted to apply a set of standards to its count that would have excluded tens of thousands of fraudulent votes, only to reverse the decision the next day, apparently following political pressure.

The recall of Galbraith would have required the agreement of the Obama administration and has come as a surprise following the earlier demand by Obama's own envoy to Afghanistan, Richard Holbrooke, that Karzai respect the proper election process.

Further damning US criticism of the Karzai administration emerged in the leaked confidential report prepared by the US commander in the country, General Stanley McChrystal, which warned that corruption within the Karzai government was as big a threat as the Taliban.

The exit of Galbraith would appear to further reduce Obama's scope for manoeuvre in Afghanistan at a time when he is facing calls from his military commander, General Stanley McChrystal, for up to 40,000 more soldiers.

Obama was expected to meet his top advisers on Afghanistan yesterday, including Vice President Joe Biden, secretary of defence Robert Gates, secretary of state Hillary Clinton, national security adviser General James Jones, Chairman of the joint chiefs Admiral Mike Mullen, and the CENTCOM commander General David Petraeus. The meeting was to include a discussion via video conference with McChrystal, whose grim assessment of the war was leaked last month. The meeting is the first of five scheduled for the coming weeks.

Galbraith's removal comes just days after reports that the US and its allies would accept Karzai remaining as president even if the investigation into voter fraud meant his share of the vote fals below 50%, which election rules had stipulated Karzai was required to win to avoid a run off with his closest rival foreign minister Abdullah Abdullah.

Speaking yesterday Abdullah, who alleges fraud took place on a massive scale, expressed concern that Galbraith had been pushed out for campaigning to prevent electoral fraud. "If the firing of Mr Galbraith was on some technical issue, I have no say in it," he said. "If the issue was based on the fact that he was for a vigorous look into the issue of fraud, in that case, I would say that he has been talking on behalf of the people of Afghanistan."

Galbraith was formerly the US ambassador to Croatia and helped negotiate the end of the war in that country. He also served as director of political, constitutional and electoral affairs for the UN transitional administration in East Timor from 2000 to 2001. Outspoken in his criticism of the conduct of the US war in Iraq during the Bush administration, he resigned from government to write The End of Iraq: How American Incompetence Created a War Without End.

Gallery takes down photo of actor when she was 10, made-up and nude, after advice from Met's obscene publications squad

A display due to go on show to the public at the Tate Modern gallery tomorrow as part of the Pop Life exhibition has been closed after a visit by officers from the obscene publications unit of the Metropolitan police.

The artwork is Spiritual America, by US artist Richard Prince. The work depicts the 10-year-old Brooke Shields, nude and heavily made up.

The exhibition was open to Tate members today. A Tate spokeswoman confirmed that the display had been "temporarily closed down" and the catalogue for the exhibition withdrawn from sale. The exhibition also includes works from Jeff Koons's series Made in Heaven, large-scale, sexually explicit images depicting the artist and his former wife, the porn model La Cicciolina.

There are also works by Cosey Fanni Tutti, who, as part of her artistic practice, worked as a porn and glamour model in the 1970s, and then displayed some of the resulting images in an exhibition at the ICA in 1976.

Spiritual America is a photograph of a photograph. The original – authorised by Shields' mother for $450 – had been taken by a commercial photographer, Gary Gross, for the Playboy publication Sugar 'n' Spice in 1976. Shields later attempted, unsuccessfully, to suppress the picture.

Prince used the image as the source material for his own 1983 piece; he placed it in a gilt frame and displayed it, without labelling or explanation, in a shopfront in a then rundown street in the lower east side, New York. The title comes from a photograph by Alfred Stieglitz, from 1923, of a gelded horse.

The work has been shown recently in New York, where it gave the title to the 2007 retrospective of Prince's work at the Guggenheim Museum.

Prince has described the image as resembling "a body with two different sexes, maybe more, and a head that looks like it's got a different birthday".

In an essay in the exhibition catalogue, Jack Bankowsky, co-curator of the exhibition, describes the image as of "a bath-damp and decidedly underage Brooke Shields ... When Prince invites us to ogle Brooke Shields in her prepubescent nakedness, his impulse has less to do with his desire to savour the lubricious titillations that it as shot to spark in its original context ... than with a profound fascination for the child star's story."

In a statement, a spokesman for the Metropolitan police said: "Officers from the Metropolitan police service obscene publications unit met with staff at Tate Modern ... The officers have specialist experience in this field and are keen to work with gallery management to ensure that they do not inadvertently break the law or cause any offence to their visitors."

Why is it that campaigns such as The Prince's Rainforest Project can't seem to attract anyone younger with global appeal?

Save the rainforests. Most sane people would agree it makes sense. But how do we go about deterring those who still make a living firing up chainsaws and carving their way through some of the most diverse, yet endangered habitats on the planet?

The Prince's Rainforest Project, the charity set up by Prince Charles two years ago to halt the destruction of the world's rainforests, thinks the best way is to put extreme pressure on the politicians meeting in Copenhagen for the COP15 climate negotiations in December so they work out a way to make rainforests more valuable alive than dead. This week, the project is launching a campaign called Rainforest SOS to encourage as many people as possible around the world to text their name and a short message in support of a deal.

And what do you get when you combine rainforests with "sending out an SOS"? Yes, Sting. The rainforest campaigner and world-famous musician is fronting the campaign with a short video message urging us to send our views on the matter to politicians in the form of a quick text. (The days of delivering ream after ream of signatures to the doorstep of 10 Downing Street don't exactly chime with our environmentally conscious times, not least for a cause which is urging us not to cut down trees.)

As you do with these sorts of things, you call on your mates for support. So we have stars of a certain age and demographic lending their names to the prince's highly commendable cause: Harrison Ford, Joanna Lumley, Stephen Fry, David Attenborough, Robin Williams, Pelé, Richard Branson, Daniel Craig, Rod Stewart, Billy Connolly, Vivienne Westwood, Olivia Newton-John, Richard E Grant and, of course, Sting.

And, yes, as is also standard with these sorts of things, we have a host of corporate sponsors, including Tesco. (Would that be the same Tesco accused, along with other supermarkets, in a recent Greenpeace report of selling meat linked to the destruction of the Amazon rainforest?)

Let's hope the campaign does the job of forcing deforestation up the agenda at the make-or-break climate conference. Is it really as easy as sending a text, though? I suppose – as Tesco likes us to say – every little helps.

But it would have been nice to see a campaign with a more youthful edge to it. Given that the vast majority of text messages are sent by people aged under 35, can't anyone have been found younger than Daniel Craig – aged 41 – to lend their name and fame to the campaign? And while Sting has a long track record when it comes to rainforest campaigning, there's little point denying that he and his wife Trudie Styler have a reputation for rubbing some people up the wrong way when it comes to proselytising their own brand of environmentalism. (For proof, see Marina Hyde's memorable exchange with Trudie Styler earlier this year.)

One wonders similar thoughts, too, when viewing the trailer for the music video (free to download tomorrow) being used to front the "TckTckTck" climate change campaign organised by a broad coalition of NGOs, such as WWF, Greenpeace, 350.org, Amnesty and Oxfam. Midnight Oil's 1987 hit, Beds are Burning, has been rerecorded with new climate change-orientated lyrics (it was originally a protest song about Aboriginal land rights in Australia) by a Band Aid-style collection of musicians from around the world. But, again, let's look at who turned up for the recording session: Duran Duran, The Scorpions, Bob Geldof, Marion Cotillard and Youssou N'dour are, perhaps, the better known of the 55 acts taking part. (Midnight Oil's Peter Garrett says he supports the project but says, as Australia's environment minister, he won't take part.)

Why is it that these campaigns can't seem to attract anyone younger with global appeal? If you're heading up a campaign with youthful pleas to "text in" or "download now", then surely you need to use the services of artists who are bagging number ones today rather than a generation ago? OK, maybe I'm being a bit harsh – the record is also graced by the presence of Lily Allen, Fergie, Klaxons, and Mark Ronson – but why aren't they making more of these names in the publicity rather than, say, the Scorpions?