U-turn as IMF hikes forecast for UK growth

IN

INTERNATIONAL Monetary Fund (IMF) revised its forecasts once again yesterday, hiking its expectation for economic growth in the UK to double what it predicted only six months ago.

The IMF’s estimate for UK growth was raised further than any other advanced economy in its latest economic outlook. As recently as July, the organisation forecast 0.9 per cent growth for the UK this year, but now expects 1.4 per cent, more in line with expectations.

It is the second time the IMF has raised its forecast for the UK in 2013: in April, the British economy was expected to grow by only 0.7 per cent, half the pace now predicted. The UK is also now projected to see economic growth of around 1.9 per cent in 2014, rising closer to the country’s historical trend level.

Only six months ago, IMF chief economist Olivier Blanchard referred to chancellor George Osborne’s fiscal strategy as “playing with fire” during a period of low growth.

Though the IMF still has reservations about the state of the economy, the organisation’s critique is now much more muted. The report says: “In the United Kingdom, recent data have shown welcome signs of an improving economy, consistent with increasing consumer and business confidence, but output remains well below its pre-crisis peak.”