Britain’s growth prospects have been upgraded by more than any other major advanced economy, according to forecasts that risk being thrown into jeopardy by Rachel Reeves’s tax raid.
Just days before the Chancellor delivers her maiden Budget on Oct 30, the International Monetary Fund (IMF) predicted the UK economy would grow by 1.1pc this year.
This is more than double its estimate of 0.5pc just six months ago, and represents the biggest upgrade of any G7 economy this year.
By contrast, the IMF downgraded its outlook for Germany and Japan, warning that Europe’s biggest economy would stagnate in 2024.
The IMF also suggested that the Bank of England should be prepared to cut interest rates faster. Pierre-Olivier Gourinchas, the IMF chief economist, warned that central banks around the world risk keeping interest rates “too tight for too long”.
In a further boost for Ms Reeves, the Fund predicted UK economic growth will “accelerate” in the coming years even as other major economies, including the US, start to slow.
“Growth is projected to have accelerated to 1.1pc in 2024 and is expected to continue doing so to 1.5pc in 2025 as falling inflation and interest rates stimulate domestic demand,” the IMF said in its latest World Economic Outlook.
However, the IMF noted that its expectation for higher UK growth was driven by falling interest rates and assumptions based on the last Tory government’s tax-and-spending policies.
Business groups, economists and entrepreneurs have already warned that Labour’s expected wave of higher taxes will dampen growth while raising little money for the Exchequer.