THE GROWTH outlook for the UK economy this year is now the best of the G7 nations, the International Monetary Fund (IMF) admitted yesterday, in a major reversal of its assessment last year.
The IMF said yesterday it expects UK GDP to increase by 2.9 per cent in 2014, almost double its estimate in April last year. Growth is set to be stronger in the UK than in Germany, the US or Japan.
The change is a huge turnaround from 2013, when chief economist Olivier Blanchard said chancellor George Osborne’s fiscal policies were “playing with fire”.
“I think it’s fair to say that our forecast was too pessimistic,” admitted Blanchard, confirming that the institution had “under-forecasted”.
“Part of our job is to think about risks, but fortunately most risks to not materialise... this is good news for the UK,” he added.
Industrial figures from the Office for National Statistics added to the upbeat outlook yesterday, with the strongest manufacturing output in three years recorded.
In the year to February, output rose by 3.8 per cent, with a one per cent boost from January alone.
The National Institute of Economic and Social Research (Niesr) also released its forecast for the first quarter of the year yesterday, projecting growth of 0.9 per cent between January and March.
The estimate indicates that the UK is growing at the most rapid pace in four years.
“This is further evidence that the government’s long term economic plan is working, providing economic security for hardworking people,” a Treasury spokesman said yesterday, in reaction to the IMF forecasts.
“But the job is not done... The biggest risk now to the recovery would be abandoning the plan that’s delivering a brighter economic future.”