Gloomy IMF gets its sums wrong again

JUST four months ago, the IMF issued a dire prediction for the UK economy, warning it would shrink by 0.6 per cent this year and be the worst performing of the leading industrialised countries.

That forecast threatened serious real world consequences. Investors looking to put money into Britain will have thought twice, firms may have put job recruitment on hold and consumer confidence took a knock.

For Opposition parties, this doommongering was a gift, allowing them to castigate the Government for its supposedly abject performance.

Yesterday, however, the IMF dramatically upgraded its figures. In a humiliating U-turn, it said that instead of falling into recession, our economy should now grow by 0.4 per cent. It is just the latest example of the economic Establishment talking Britain down. Ever since Brexit, they have predicted economic Armageddon and have been desperate to be proved right.

In other good news, figures today are set to show inflation dropping to single digits and a significant fall in the energy price cap is due. But Chancellor Jeremy Hunt shouldn’t break out the bunting just yet.

Inflation is still crushing household incomes, borrowing remains troublingly high and there are signs the City of London may be falling behind other financial centres because of high taxes and over-regulation

So how to tackle these problems? The answer is for Mr Hunt to maintain a laserlike focus on stimulating growth and productivity. A good start would be encouraging the long-term sick back into work and, of course, cutting taxation.

Doing so would generate even greater economic improvement – and prove the IMF’s forecasts hopelessly pessimistic once again.