The International Monetary Fund is expected to raise its estimate of growth in the UK economy tomorrow, in figures that will be seized upon by George Osborne, the Chancellor.
Reports were circulating last night that the IMF will upgrade its estimate of GDP growth in 2014 to 2.4 per cent, having estimated in its October round of forecasts that growth will come in at just 1.9 per cent.
Such an upgrade would put the IMF in line with the most recent estimate from the Treasury’s Office for Budget Responsibility, and reflect the fact that a host of economic indicators have significantly exceeded expectations over the past four months since its last outlook.
The Office for National Statistics reports that the economy grew by 0.8 per cent in the third quarter of the financial year, after expanding at the same rate in the second quarter. Most forecasters anticipate a similar expansion again in the final quarter. That would take full year growth for 2013 to around 1.4 per cent, the fastest registered since 2010.
However, 2.4 per cent growth in 2014 would still be lower than the 2.7 per cent average forecast from private sector analysts.
The British Chambers of Commerce is expecting GDP to grow by 2.8 per cent in 2014, while the Ernst & Young Item Club predicted full year growth yesterday of 2.7 per cent.
An upgrade from the IMF would be seen by the Chancellor as a vindication, since the Fund last year joined those calling for the Government to slow down its planned spending cuts.
The IMF’s chief economist, Olivier Blanchard, warned Mr Osborne that he was “playing with fire” by sticking to his austerity policies at a time when the economy seemed to be on the verge of a triple-dip recession.
In October the IMF estimated that the global economy would grow by 3.6 per cent in 2014. That is also expected to be upgraded slightly, following better news recently from the US.