The International Monetary Fund has raised its forecast for Britain’s GDP growth rate for the second time this year, heaping further embarrassment on the Washington-based organisation following its warning in 2013 that George Osborne’s austerity policies were “playing with fire” and could trigger a slump.
The IMF said Britain would maintain its status as one of the world’s fastest expanding major economies following a surge in growth to 3.2% by the end of the year.
The lender of last resort, which is headed by former French finance minister Christine Lagarde, uprated the UK’s outlook for GDP growth by 0.4 percentage points this year and 0.2 percentage points to 2.7% next year in its latest world economic outlook.
After 18 months of recovery, the forecast that growth would continue for the rest of the year and into 2015 was a boost for George Osborne, especially after the same organisation criticised his austerity programme only last year.
Olivier Blanchard, the IMF’s chief economist, said last April that the risk for Britain of “having no growth, or very little growth, for a long time is very high” should the government maintain its austerity programme.
Since then the UK has seen employment expand rapidly and the economy regain its pre-recession level of output. In April this year, the IMF forecast that the UK would outperform other big economies with 2.9% growth.
The Office for National Statistics is to give its first estimate on Friday of output in the three months to the end of June following a strong first quarter that saw expansion hit 0.8%, giving an annual growth rate of more than 3%.
Despite a recent slowdown in high street spending and a cooling in house-price rises, the figures were expected to confirm what the governor of the Bank of England, Mark Carney, said in a speech on Wednesday was already true – that Britain had already passed its previous peak and was reaching new highs.
via The Guardian