Chancellor Jeremy Hunt says “better days lie ahead” after experts tore up their forecasts of a recession this year, instead predicting the economy will grow.
The International Monetary Fund upgraded Britain’s outlook from the worst performing nation in the G7 this year.
And long term it tipped us to have stronger prospects than Germany, France and Italy.
The Chancellor said the UK was making progress and has a “bright future” after sticking to the government’s economic plan to bring down inflation and debt.
Mr Hunt told the Daily Express: “The IMF has given a decisive vote of confidence in the British economy, our economic policy, and our plan to halve inflation and grow the economy.
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“Better days lie ahead if we stick to our plan, with confidence returning and our long-term growth prospects now brighter than those in Germany, France and Italy. That shows how we are taking advantage of Brexit’s opportunities, harnessing the technologies and industries of the future, and putting ourselves on the right path.
“While there are still challenges, we are making progress. We are a great country with a bright future – now let’s get on and deliver our plan. It’s what we were elected to do.”
The IMF believes the UK economy will grow 0.4 percent this year. Last month it forecast a contraction of 0.3 percent.
It said measures announced in the Budget to boost childcare and support for companies “should have a positive effect on medium-term growth”.
PM Rishi Sunak’s deal with Brussels on post-Brexit trading was also credited with ending uncertainty, while an expected fall in energy prices is tipped to lead to a significant drop in the cost of living.
Inflation figures out on Wednesday are expected to see it dip below 10 percent for the first time since July.
However, food inflation is running at 17.2 percent, and Mr. Hunt on Tuesday met food manufacturers to discuss how to bring that down.
The Chancellor insisted the IMF’s assessment showed the government was on the right track to “restore stability and tame inflation”.
He said: “It praises our childcare reforms, the Windsor Framework and business investment incentives. But the job is not done yet.” Labor has previously said bleak IMF forecasts prove the government is lurching from “crisis to crisis”.
IMF chief Kristalina Georgieva defended her economists from suggestions that they regularly read the UK wrong.
She insisted the IMF projections are “slightly less pessimistic” than forecasts by the Bank of England and others. She said: “We have gone through a very turbulent time…shock, upon shock, upon shock. That has created exceptional uncertainty.”
Ms Georgieva said that despite the better growth outlook, tax cuts are not “affordable” or “desirable”. Tory chairman Greg Hands said: “Presumably all on the Left who quoted the IMF before will now welcome this revised forecast.”
Conservative MP Jacob Young said it was “good news for our economy, bad news for those who are desperate for us to fail”.
Julian Jessop, economics fellow at the Institute of Economic Affairs, cautioned: “The large upgrade to the IMF’s forecast for the UK economy in just a month shows why we shouldn’t take these numbers too seriously.
“But the revision is consistent with other signs that the UK will dodge the recession so many feared. Unfortunately, growth is still expected to be sluggish. The UK economy is predicted to grow by an average of just 1.5 percent a year over the longer term.
“The IMF makes policy recommendations to boost productivity and growth. But many of these are politically difficult – such as easing planning restrictions and reducing barriers to business investment. The government needs to be more ambitious.
The IMF report endorsed plugging skills shortages with foreign workers but said the UK should look at “fine-tuning the immigration system to alleviate sectoral and skilled labor shortages and enhance labor market flexibility”. Mr Sunak’s spokesperson said: “It’s good news the economy is growing.
“It requires discipline on government spending and many other areas. The Government will stick to that plan.”