The International Monetary Fund (IMF) is today upgrading Britain’s growth forecast for the second time in just three months. This move consolidates the view that Britain’s economy is growing faster than most other major economies.
The IMF forecast GDP growth for 2014 at 1.9 per cent back in October, but has now revised this figure to 2.4pc, a figure it thinks is likely to be one of the highest among all of the world’s advanced economies. This revision follows a similar one from three months ago when the IMF increase its earlier prediction in April from 1.5 per cent.
According to the Daily Telegraph this underscores the speed at which sentiment on Britain’s economic recovery has progressed, and this is supported by other forecasters including the Bank of England and the Office for Budget Responsibility (OBR) who have both also upgraded their growth projections.
Figures due for release from the Office for National Statistics (ONS) next week are, according to the Daily Telegraph, expected to show the UK economy grew by 0.8pc in the last quarter of 2013.
Growth at this rate would mean the UK economy grew by a total of 1.9pc in 2013, well above the OBR’s December forecast of 1.4pc.
Predicting increasing optimism in the global economy, Christine Lagarde, the IMF’s MD, has said that although there is still a lingering crisis, a more stable outlook and optimism is in the air means that she has great hopes for 2014 as a game changer.
Whilst some are still pessimistic about Britain’s economic recovery, being over reliant on consumer spending and a rising housing market, stoking fears of another housing “bubble”, others feel that these upgrades are really significant.
Middle incomes are still under pressure. With no real increase in wage levels predicted until into 2015, fears that recent falls in unemployment will result in the promised Bank of England governor’s trigger of interest rate rises, once the unemployment figure reaches 7%, a figure which is now well within sight.