Economy will leap forward, predicts IMF

ECONOMIC growth could surge in Britain this year, according to experts at the International Monetary Fund.

In its latestWorld Economic Outlook report the IMF projects the UK will leap by 3.6 per cent – 0.4 per cent more than its forecast in July.

Growth will then slow to 0.3 per cent in 2023 as consumer spending catches up with rampant inflation and higher interest rates.

The slowdown of the global economy has intensified since April as it faces “stubbornly” high inflation, IMF economists said.

Germany and Italy will see weaker growth than the UK, with the Washington-based body forecasting decline for both countries in 2023.

Russia’s economy is expected to shrink by 2.3 per cent next year – the biggest drop of all.

Britain and other countries have recently raised base interest rates to help tame spiralling inflation, making borrowing more expensive for households and businesses.

The Bank of England’s interest rate is 2.25 per cent and is expected to be raised next month. This is set to take its toll next year as consumers cut spending and businesses slow investments, resulting in slower growth, the IMF said.

The body noted its forecast was prepared before the Government unveiled its mini-Budget which set out sweeping tax cuts including on stamp duty and income tax.

It said: “The fiscal package is expected to lift growth somewhat above the forecast in the near term, while complicating the fight against inflation.” Globally, the growth forecast remains unchanged at 3.2 per cent for 2022.

However, the IMF cut its projection for 2023 to 2.7 per cent from a previous 2.9 per cent.