The International Monetary Fund (IMF) has raised the UK’s economic growth forecast for 2014 from 1.9 per cent to 2.4 per cent, a higher estimate than for any other major European country.
Yesterday’s (January 21) forecast is a marked difference to the IMF’s prediction a year ago, when its chief economist, Olivier Blanchard, stated that the Chancellor’s fiscal policy was “playing with fire”.
Nevertheless, in his report, Mr Blanchard welcomed a slowdown in the UK’s austerity process, saying that “credit conditions are increasingly favourable in the UK, public debts are on sustainable paths, and fiscal consolidation is, rightly, slowing down”.
The IMF also raised its global growth outlook slightly, although Mr Blanchard prefaced his update by describing the global recovery as “weak and uneven”.
In fact, the UK was highlighted for its achievements, with the forecast being well ahead of Europe’s largest economy, Germany, where growth is predicted to be 1.6 per cent. Mr Blanchard added that France’s economy would grow by a much weaker 0.9 per cent, given that “policy uncertainty is weighing on growth”.
The IMF also reiterated its view that growth in advanced economies would accelerate markedly this year, to 2.2 per cent from 1.3 per cent in 2013, while according to the Fund, growth in emerging markets and developing economies will rise slightly to 5.1 per cent from 4.7 per cent in 2013.
