A new report from the International Monetary Fund (IMF) has predicted that UK economic growth will reach 2.9 per cent in 2014 and says that the country will be the fastest-growing in the G7 group of nations this year.
The IMF’s forecast has been raised from its January figure of 2.4 per cent, which it now says was “too pessimistic” and the organisation is also predicting that the UK will see growth of 2.5 per cent in 2015.
According to the report, growth in the UK has rebounded more strongly than anticipated on the back of easier credit conditions and increased confidence.
However, it cautions that the recovery has been unbalanced, with business investment and exports still disappointing.
For instance, an external shock involving further growth disappointment in emerging market economies could spill over to the euro zone, which could spread to the UK through “financial linkages”.
However, the report added that the Government’s efforts to raise capital spending while staying within the medium-term fiscal envelope should help bolster recovery and long-term growth.
The IMF’s predictions were also robust for the US, with a forecast for growth of 2.8 per cent in 2014 and 3 per cent in 2015. However, it scaled back its forecast for emerging and developing nations, including India and Brazil, by 0.2 per cent.
Commenting on the new prediction, Chancellor George Osborne, who is currently on an export drive in Brazil, called it “proof that the economic plan is working”.
The report was part of a raft of good news on the economy this week, with the National Institute of Economic and Social Research (NIESR) calling UK growth in the first part of this year “robust” and figures from the Office for National Statistics showing that UK manufacturing output grew by 1 per cent in February from January.