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IMF raises UK economic growth forecast

POSTED: 28th January 2014
IN: Business news
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The International Monetary Fund has raised its growth forecast for the UK economy to 2.4 per cent for 2014 from its previous forecast of 1.9 per cent made in October 2013.

The International Monetary Fund has raised its growth forecast for the UK economy to 2.4 per cent for 2014 from its previous forecast of 1.9 per cent made in October 2013.

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The revised prediction suggests the UK will grow faster than any other European economy this year and it expects the economy to grow by 2.2 per cent in 2015.

The IMF raised growth predictions for the UK from its October forecast by more than any other advanced economy.

The revised forecast matches the latest predictions for UK economic growth from business organisation the CBI and the independent Office for Budget Responsibility (OBR).

A spokesman for the Treasury said: "The report provides further evidence that the government's long term economic plan is working.

"But the job is not yet done and so the government will go on taking the difficult decisions necessary to deliver a sustainable recovery for all."

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

"With business investment still weak and the IMF forecasting that UK growth will slow down again next year, it's clear that this is not yet a recovery that is built to last."

It expects the world’s largest economy, the US, to grow by 2.8 per cent this year, up from its forecast of 2.6 per cent.

The second largest economy in the world, China is predicted to grow by 7.5 per cent in 2014.

The IMF says that the eurozone “is turning the corner from recession to recovery,” and predicts growth will be 1.0 per cent this year and 1.4 per cent in 2015.

This should help the UK’s overall economic recovery as the euro area is a key trading partner so this should lead to a boost in exports and help the UK economy towards a more balanced recovery.

Overall, the IMF raised its global growth outlook slightly to 3.7 per cent, rising to 3.9 per cent in 2015.

Olivier Blanchard, the IMF’s chief economist said: “The basic reason behind the stronger recovery is that the brakes to the recovery are progressively being loosened.”

“The drag from fiscal consolidation is diminishing. The financial system is slowly healing."

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