Financial News

  • 22 January 2014, 18:56

Osborne Hails New IMF Growth Forecast For UK

The Chancellor has welcomed the IMF's new growth forecast for Britain by saying it is an acknowledgement that the Government is on the right track.

George Osborne told Sky News's Economics Editor Ed Conway there was clear evidence that his policy of avoiding "quick fixes" had reaped dividends.

He said: "The IMF have upgraded the British growth forecast by more than any other country and there is also good news in manufacturing.

"I think that shows there is the clear evidence that by working through our plan and by avoiding the sort of quick fixes and the easy options we are delivering security to all the hard working people of this country."

The growth forecast for the UK has been upgraded to 2.4% this year by the International Monetary Fund (IMF), as revealed by Sky News.

The latest projection, up from a previous figure of 1.9%, puts Britain ahead of European rivals including Germany and France. However, it is behind the US, which is on 2.8%.

The figures are in line with the latest forecasts from Britain's independent Office for Budget for Responsibility (OBR).

Prime Minister David Cameron tweeted: "An encouraging sign of more jobs and security for hardworking people: the IMF confirms upgrading our growth forecast."

The IMF predicts that growth for 2013 will be turn out to be 1.7% with 2.4% recorded in 2014. Growth will fall to 2.2% in 2015.

The IMF report said: "Activity in the United Kingdom has been buoyed by easier credit conditions and increased confidence."

But the report said "economic slack", effectively spare capacity in the economy, would remain high.

The UK's economic recovery so far has been fuelled by consumer spending and experts say a rise in real-term wages - which remain depressed - together with an improvement in exports and business investment is needed to maintain an upward trend.

The IMF forecasts that the world economy will grow by 3.7%in 2014, up from 3.6% in its last forecast.

It also said that the eurozone was "turning the corner from recession to recovery" but this would not be uniform.

It comes just nine months after the body urged the Government to rethink its austerity strategy, with the fund's chief economist telling Mr Osborne he was "playing with fire".

Shadow chancellor Ed Balls said: "After three damaging years of flat-lining, any growth is both welcome and long overdue.

"But this is the slowest recovery for 100 years and working people are facing a cost-of-living crisis with real wages now down 1,600 a year under David Cameron."

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