Gordon Brown yesterday hailed the decision of the International Monetary Fund to back his controversial forecast that UK economic growth will return to boom levels this year.
The Chancellor said the IMF, one of several global think tanks to have criticised the Treasury's forecasts, had accepted the UK was in robust economic health. The IMF told finance ministers at this weekend's Group of Seven (G7) meeting the world was poised for strong growth.
The IMF is understood to have revised up its forecast for this year's GDP, taking its estimate for world growth from 4.1 per cent to 4.5 per cent and for the UK from 2.4 per cent to 3.1 per cent. This puts the IMF in line with the Chancellor's long-standing forecast of growth of between 3.0 and 3.5 per cent this year.
Speaking on the sidelines of the G7 meeting in Boca Raton, Florida, Mr Brown hinted he would stick with those numbers in next month's Budget. "Our view is that the economic growth is stronger than last year," he said. "The IMF are suggesting that we will see world growth of 4.5 per cent in 2004 and 2005 and growth is forecast to rise in all parts of the world. The UK, having been the only major economy that has avoided recession, has stronger and more balanced growth."
He used the upbeat message for the UK economy to hammer home his view that continental Europe needed to accelerate reform of its labour, financial and product markets to boost its current anaemic growth levels and meet the targets for 2008 set by heads of state at the Lisbon conference in 2000.
Mr Brown published the UK's proposals for reform yesterday, before the spring European Council meeting next month. He said economic growth was picking up in the eurozone but that more would be needed if the bloc were to reduce its growing army of unemployed.
The document, Economic Reform in an Enlarged Europe, calls for more flexible labour markets, with reforms to the tax and benefit systems to encourage disadvantaged groups to find work.Reuse content