Britain’s economy was given a major upgrade by international forecasters after strong consumer spending.
The International Monetary Fund said the UK will outperform Germany this year with output expected to grow by 0.4 per, an upgrade by 0.7 percent on previous forecasts.
But it is still expected to be the second slowest growing nation in the G7 group of leading economies this year.
Chancellor Jeremy Hunt was overheard in April telling IMF boss Kristalina Georgieva that “we’re very focused on proving you wrong” after a string of gloomy forecasts.
A Treasury spokesman said: “The IMF have praised the UK’s decisive action to fight inflation, and today’s report confirms a big upgrade to our growth forecast compared to April, with the UK set to grow at the same rate as the United States and Japan next year.
“The IMF also say it’s important to rebuild our finances and maintain financial stability; that’s why we have a clear plan to halve inflation this year, grow the economy and get debt falling.”
Growth in the US is expected to be the most rapid of all G7 countries at 1.8 percent.
Canada follows at 1.7 percent, Japan at 1.4 percent, Italy at 1.1 per cent and France at 0.8 percent.
Across all advanced economies, which includes the G7 and other countries, growth is expected to drop from 2.7 percent to 1.5 percent this year.
The IMF said the Windsor Framework agreement announced by Prime Minister Rishi Sunak to end trade tensions between Northern Ireland and Great Britain after Brexit has helped.
“Growth in the United Kingdom is projected to decline from 4.1 percent in 2022 to 0.4 percent in 2023, then to rise to one percent in 2024,” the IMF said.
“This is an upward revision of 0.7 percentage points for 2023, reflecting stronger-than-expected consumption and investment from the confidence effects of falling energy prices, lower post-Brexit uncertainty (following the Windsor Framework agreement), and a resilient financial sector as the March global banking stress dissipates.”
The IMF said that most of the countries in the world are prioritising attempts to reduce inflation.
“Following the build-up of gas inventories in Europe and weaker-than-expected demand in China, energy and food prices have dropped substantially from their 2022 peaks, although food prices remain elevated,” it added.
The IMF also said that a push on green investment was needed to make sure that there is enough energy to meet countries’ green targets.
IMF director of research, Pierre-Olivier Gourinchas, said: “The global economy continues to gradually recover from the pandemic and Russia’s invasion of Ukraine.
“In the near term, the signs of progress are undeniable.
“The Covid-19 health crisis is officially over, and supply-chain disruptions have returned to pre-pandemic levels.
“Economic activity in the first quarter of the year proved resilient, despite the challenging environment, amid surprisingly strong labour markets.
“Energy and food prices have come down sharply from their war-induced peaks, allowing global inflation pressures to ease faster than expected.
“And financial instability following the March banking turmoil remains contained thanks to forceful action by the US and Swiss authorities.”