IMF Upgrades UK Growth Forecast Above Rivals
The International Monetary Fund is on the brink of upgrading its growth forecast for the UK more than any other major economy, Sky News has learnt.The Fund is poised to increase its projection for UK growth in 2014 from 1.9% to 2.4%. Although the Fund will also lift its forecasts for world economic growth, the UK upgrade is significantly stronger.
It is the latest boost to the fortunes of the Chancellor, coming barely 24 hours after the Ernst & Young ITEM Club also increased its projection for UK economic growth this year.
Although the Fund’s forecast for growth this year will be shy of the 2.7% predicted by the ITEM Club, the scale of the upgrade underlines how quickly sentiment about Britain’s economy has turned in recent months.
The updated forecasts may also be construed as a reputational blow for the Fund itself, whose chief economist warned less than a year ago that the economic policies being carried out by George Osborne amounted to “playing with fire”.
Since then, the Fund has already increased its growth projections for Britain once, last October, before this week’s anticipated upgrade.
The news comes amid growing optimism about the speed of the UK recovery. In spite of concerns about retailers’ fortunes over Christmas, retail sales grew in December at the fastest annual rate in almost a decade.
The Office for National Statistics is expected to announce next week that growth in the final quarter of 2013 remained relatively strong at around 0.7%.
However, some have voiced concern that Britain has been reliant for much of the growth on household spending rather than the exports and manufacturing sector.
The IMF itself has voiced concern that, having failed to rebalance the economy, the government is now reliant, through policies such as Help to Buy, on boosting the housing market and encouraging consumers to take out more debt.
Nonetheless, the IMF upgrade represents the latest evidence that Britain’s recovery is starting to take real hold, pushing the country towards robust growth this year.