IMF raises UK growth forecast to 2.4%
Mark Carney free to keep rates low as IMF warns against withdrawing stimulus too soon
Tuesday 21 January 2014
The International Monetary Fund has raised the UK's growth forecast for 2014 in a fresh boost for George Osborne.
The organisation said the UK economy will now grow 2.4% this year - up from its previous estimate of 1.9%. The revised growth figure is higher than any other major European country.
The announcement gives the Bank of England more leeway to keep its foot firmly pressed on the economic accelerator until a recovery is established without fuelling inflation.
The renewed optimism on the UK marks a shift from a year ago when the IMF’s chief economist Olivier Blanchard warned that the Chancellor was “playing with fire”.
But in opening remarks presented with the IMF's update, Mr Blanchard described the global recovery as “weak and uneven” as the US outstrips Europe and core eurozone countries such as Germany outstrip strugglers like Spain and Italy. “In most advanced economies, unemployment remains much too high,” he added.
The IMF also warned advanced economies should "avoid a premature withdrawal of monetary policy accommodation… as output gaps are still large while inflation is still low”.
The IMF is concerned over the potential threat of deflation in the eurozone, while inflation is well below target at 0.8 per cent.
IMF managing director Christine Lagarde has called falling prices “an ogre that must be fought decisively” and the body added the European Central Bank may need to consider “additional measures” to ward off concerns.
Blanchard added: “Deflation means higher real interest rates, higher public and private debt burdens, and further deflation pressure. To avoid that risk, accommodative monetary policy remains of the essence.”
The other risk flagged up by the IMF is the West’s eventual move away from emergency monetary policy, underlined by the US Federal Reserve set to vote for further tapering of its quantitative easing programme next week.
Billions have been pulled out of emerging markets, potentially destabilising their economies.
“Clear communication by advanced economies’ central banks, and stronger domestic policies in some emerging markets, are both essential to reduce this risk,” Blanchard added.
Britain First criticised for using actress's memory to draw attention to their 'hate-filled home page'
Emergency call 'started off dumb, but got pretty serious'
- 1 This 'woman calls police to order pizza' story isn't going where you're expecting
- 2 Axe wielding man shot dead after attacking four New York policemen on busy street
- 3 Watch what happened when food critics were unknowingly served McDonald's
- 4 Jimmy Carr's Oscar Pistorius joke goes a bit too far at the Q Awards
- 5 Ottawa shootings: Bruce MacKinnon's cartoon is the perfect tribute to soldier Nathan Cirillo
Renee Zellweger on plastic surgery rumours: 'I'm living a more fulfilling life and I'm thrilled that perhaps it shows'
This 'woman calls police to order pizza' story isn't going where you're expecting
FCKH8: YouTube reinstates provocative anti-sexism video showing young girls swearing
Axe wielding man shot dead after attacking four New York policemen on busy street
Diwali: What is the festival of lights – and how is it celebrated around the world?
Of course, teenage girls need role models – but not like beauty vlogger Zoella
Cameron is warned 'no possibility' of UK reducing immigration and that bid to bring in quota on migrant workers would be illegal
Support for EU membership 'at highest level since 1991' with most Brits wanting to stay 'in'
Thousands with degenerative conditions classified as 'fit to work in future' – despite no possibility of improvement
Residents should throw a street party and mix with immigrant neighbours, councils told
Attacks on 'Ukip Calypso' show how skewed people’s priorities are
iJobs Money & Business
£60000 per annum: Ashdown Group: Compensation and Benefits Manager - Compensat...
£30000 - £35000 Per Annum plus excellent benefits: Clearwater People Solutions...
£24000 - £28000 per annum + bonus & benefits: Ashdown Group: IT Business Syste...
£50000 - £90000 per annum + benefits: Ampersand Consulting LLP: Markit EDM (CA...