Britain defies the doom mongers!

With inflation and energy bills set to fall, IMF says it was WRONG and we’re NOT heading for recession

Sunnier days are on their way for the economy, the international Monetary Fund predicted yesterday, amid growing hopes that the cost of living squeeze is starting to ease.

GDP is now expected to grow by 0.4 per cent this year, according to the iMF, a sharp upgrade after it predicted just weeks ago that it would shrink by 0.3 per cent.

Chancellor Jeremy Hunt said the u-turn by the Washington-based body was a ‘decisive vote of confidence’ in his stewardship of the economy, while Downing Street said the Government’s approach was ‘starting to bear fruit’.

The iMF is the latest institution to have to tear up doom-laden forecasts for Britain after businesses and consumers proved more resilient than expected.

The Bank of england has already binned predictions that we were on track for the longest recession on record.

it comes ahead of official figures today that are expected to show inflation falling below 10 per cent for the first time since last summer.

Bank of england governor Andrew Bailey yesterday told MPs that inflation had ‘turned the corner’.

And in further glimmer of hope for consumers, the energy regulator is tomorrow expected to announce a £450 fall in typical annual energy bills for millions of households.

Kristalina Georgieva, the iMF’s managing director, yesterday admitted that Britain was no longer bottom of the class among G7 countries and now looked set to outperform Germany this year.

‘Like the weather outside the outlook for the uK economy has improved – but in the context of a highly uncertain global environment, structural challenges and still very-high inflation,’ she said.

The improved forecast is a victory for Mr Hunt over Ms Georgieva after he vowed to prove her wrong when the previous predictions were published last month.

One expert, eToro strategist Ben Laidler, said the iMF had ‘eaten humble pie’. During a press conference at the Treasury yesterday Ms Georgieva was forced to defend her organisation’s forecasting record, claiming it had been ‘agile’ in the face of recent turmoil.

recent years have been ‘ the foggiest we have seen in many decades’, she said. The iMF said the uK outlook had been boosted by falling energy prices, more generous government support and improved business confidence after ministers tackled thorny post-Brexit issues involving northern ireland and retained eu laws.

it expects growth to pick up speed 1 per cent next year and 2 per cent in 2025 and 2026.

However, the iMF echoed the Bank of england’s most recent forecast in predicting that the fight to bring inflation down to 2 per cent will take longer.

it is now not expected to sink to this level until mid-2025, six months later than previously thought.

That means ongoing pain for households as wages struggle to keep pace with spiralling prices.

Ms Georgieva hailed the ‘ decisive and responsible’ steps taken by UK authorities in response to market turmoil that has erupted in recent months.

She added: ‘Their efforts and the recent decline in energy prices are beginning to have a favourable impact on the economy.’

But asked about when living standards would start to improve she pointed to ‘the medium term’ from 2025 to 2027, when ‘we are seeing these improvements paying back to the British people’.

That is likely to add to the clamour for pre- election tax cuts from Tory MPs.

But Ms Georgieva said that while it was ‘attractive’ to seek a lightening in the tax burden, this was ‘neither affordable nor desirable’

at a time when the Bank of england is trying to contain inflation.

The upgraded GDP forecast means Britain is no longer expected to lag behind the rest of the G7 group of advanced economies this year – with Germany, europe’s biggest economy, predicted to shrink by 0.1 per cent.

Mr Hunt said the IMF’s report was ‘a decisive vote of confidence in UK economic management’ – as well as sounding a warning about global risks. The Prime Minister’s official spokesman said: ‘We are confident that the approach that we are taking... is starting to bear fruit but of course there is much work still to do.’