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Economic forecasting doesn't necessarily have a good record, and there will be factors at play which have nothing to do with the government, but this report is perhaps counterintuitive given the current narrative.
The UK upgrade was in contrast to the eurozone, where the IMF revised down its forecasts for growth in 2025 in Germany, France and Italy.
The chancellor, Rachel Reeves, said: “The UK is forecast to be the fastest growing major European economy over the next two years and the only G7 economy, apart from the US, to have its growth forecast upgraded for this year."
Germany was expected to recover from a two-year period of contraction with a 0.8% growth rate in 2025, but the forecast was downgraded in the latest assessment to just 0.3%. France is predicted to grow by 0.8% after a 0.3 percentage point downgrade.
Next year, the UK is on course to grow by 1.6%, topping France, Germany and Italy for a second successive year.
Despite what the tin-hatters might think, there will be a boost from a (hopefully lasting ceasefire in Gaza). Supply chains should become more secure in the region. The Economist estimated prolonged conflicts in the Middle East and Ukraine could cost the global economy over $1trn.
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IMF upgrades UK growth forecast on 17:05 - Jan 17 with 2645 views
Despite what the tin-hatters might think, there will be a boost from a (hopefully lasting ceasefire in Gaza). Supply chains should become more secure in the region. The Economist estimated prolonged conflicts in the Middle East and Ukraine could cost the global economy over $1trn.
Closer to home, this is what City AM reports.
The IMF’s chief economist, Pierre-Olivier Gourinchas, said some of the revision reflects “continued pick-up in real incomes and consumption”, and the fact that the Bank of England has started, and is expected to continue, cutting interest rates.
But he said it also reflects policy measures in the autumn Budget which are expected to boost public investment in the UK.
“We see some positives coming from increased public spending,” Gourinchas said.
“Of course, some of the Budget is financed by increased taxes – national insurance contributions have been increased – that could weigh down, but the net effect in our assessment is still positive for growth for the UK economy in 2025.”
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IMF upgrades UK growth forecast on 17:08 - Jan 17 with 2611 views
IMF upgrades UK growth forecast on 17:05 - Jan 17 by DJR
Closer to home, this is what City AM reports.
The IMF’s chief economist, Pierre-Olivier Gourinchas, said some of the revision reflects “continued pick-up in real incomes and consumption”, and the fact that the Bank of England has started, and is expected to continue, cutting interest rates.
But he said it also reflects policy measures in the autumn Budget which are expected to boost public investment in the UK.
“We see some positives coming from increased public spending,” Gourinchas said.
“Of course, some of the Budget is financed by increased taxes – national insurance contributions have been increased – that could weigh down, but the net effect in our assessment is still positive for growth for the UK economy in 2025.”
Yeah, but Keir Starmer is literally murdering farmers by reintroducing the inheritance tax they were excused in 1986.
IMF upgrades UK growth forecast on 17:05 - Jan 17 by DJR
Closer to home, this is what City AM reports.
The IMF’s chief economist, Pierre-Olivier Gourinchas, said some of the revision reflects “continued pick-up in real incomes and consumption”, and the fact that the Bank of England has started, and is expected to continue, cutting interest rates.
But he said it also reflects policy measures in the autumn Budget which are expected to boost public investment in the UK.
“We see some positives coming from increased public spending,” Gourinchas said.
“Of course, some of the Budget is financed by increased taxes – national insurance contributions have been increased – that could weigh down, but the net effect in our assessment is still positive for growth for the UK economy in 2025.”
Probably best not to get too excited. What hasn’t been reported is that the IMF forecast of 1.6% is still quite a bit lower than the OBR forecast for 2025 of 2% on which Reeves fiscal sums are based.
There will need to be tax rises, breaking a manifesto commitment, or spending cuts this year.
Despite what the tin-hatters might think, there will be a boost from a (hopefully lasting ceasefire in Gaza). Supply chains should become more secure in the region. The Economist estimated prolonged conflicts in the Middle East and Ukraine could cost the global economy over $1trn.
Football forum!
"They break our legs and tell us to be grateful when they offer us crutches."
IMF upgrades UK growth forecast on 08:20 - Jan 18 by GlasgowBlue
Probably best not to get too excited. What hasn’t been reported is that the IMF forecast of 1.6% is still quite a bit lower than the OBR forecast for 2025 of 2% on which Reeves fiscal sums are based.
There will need to be tax rises, breaking a manifesto commitment, or spending cuts this year.
I'm not particularly excited given, as I suggested in the OP, economic forecasting is more of an art than a science.
Indeed, as this article points out ,the OBR don't have a particularly good record, although they are the only game in town when it comes to the Budget.
"So how accurate have the OBR's predictions been in the past?
Ten of its 15 pre-pandemic forecasts for growth (shown on the left of the chart below) have been within two percentage points of the economy's eventual growth. [Meaning 5 were outside that.]
That is slightly better than the margin of error the OBR provides with its forecasts, but two percentage points is still tens of billions of pounds for an economy the size of the UK's."
And when it comes to borrowing, 13 of those forecasts ended up with higher borrowing than forecast.
[Post edited 18 Jan 9:50]
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IMF upgrades UK growth forecast on 17:03 - Jan 18 with 1774 views
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