Look what happens when a conservative government gets in and starts to fix the books after 10 years of labor in the UK.
“Britain’s economic plan to get the public finances in order has helped raise business confidence and assisted in restoring growth to the economy. Beating other major economies, these figures are a real coup for the chancellor.”
Britain’s recovery outstrips the world
Britain’s economic recovery is leaving the rest of the developed world in its wake after the International Monetary Fund upgraded its growth forecast by more than any other major economy.
The UK is now expected to grow by 3.2 per cent this year, more than any other member of the G7 group of leading nations and a full percentage point more than Canada, the next closest country. If the IMF is correct, it would be the strongest single year since the final heady days before the financial turmoil in 2007.
Yesterday’s announcement was the fourth successive upgrade to UK growth by the IMF in a year, bucking its increasingly pessimistic outlook for the global economy. The 0.4 percentage point rise for Britain was described as a surprise by the Washington-based fund.
George Osborne, the chancellor, welcomed the revision, which came just over a year after Olivier Blanchard, the IMF’s chief economist, accused him of “playing with fire” by persisting with austerity. Since the row in April last year, the IMF has more than doubled its UK forecast from 1.5 per cent.
Mr Blanchard admitted this year that the IMF had been too pessimistic, and Christine Lagarde, the IMF’s managing director, conceded that the fund had “got it wrong” on the UK. “The IMF is eating humble pie again,” Ruth Porter, head of economics and social policy at the Policy Exchange think-tank, said.
“Britain’s economic plan to get the public finances in order has helped raise business confidence and assisted in restoring growth to the economy. Beating other major economies, these figures are a real coup for the chancellor.”
The government is expected to receive another boost today, when the Office for National Statistics confirms that all the ground lost in the recession has been recovered and the economy is bigger than ever before.
Economists expect the ONS to report that the economy grew 0.8 per cent in the three months to June, matching the previous quarter. Anything above 0.6 per cent will lift national output above its pre-crisis high, six years after the Great Recession struck.
Danny Alexander, the Liberal Democrat chief secretary to the Treasury, said that the new outlook demonstrated “that Britain is now in the fast lane of recovery”, but he cautioned that there was “still a long way to go to fully repair the damage of the Labour years”.
Ensuring that the Conservatives do not take exclusive credit for the recovery, he added: “This confirms again that our decision to form the coalition has given Britain the strength and stability to deliver the economic plan, every part of which bears the hallmark of Liberal Democrat values.”
Ed Balls, the shadow chancellor, said that there was little to celebrate as GDP per person still has a long way to go to regain its former levels. “Not only is it two years later than the chancellor’s original plan, and three years after the US reached the same point, it’s also the case that GDP per head won’t recover to where it was for around another three years; in other words, a lost decade for living standards,” he writes in The Guardian today.
There was little to dispute about the IMF upgrade, though. The fund also revised its UK growth forecast for 2015 from 2.5 per cent to 2.7 per cent, far higher than its original prediction of 2 per cent in October last year.
A separate economic survey yesterday from the CBI, the employers’ forum, suggested potential growth was running at around a ten-year high.
In its half-yearly World Economic Outlook update, the IMF reserved its concerns to emerging markets and parts of the eurozone.
It cut its global growth outlook from 3.7 per cent to 3.4 per cent this year, largely on the back of a huge downgrade to the US and a smaller revision to emerging market prospects. “The recovery continues, but it remains a weak recovery,” Mr Blanchard said.
The US revision, he added, “to a large extent reflects something that has already happened, namely the large negative US growth rate in the first quarter”. America was hit by unusually bad weather and destocking by companies at the start of the year, causing the economy to shrink by 2.9 per cent on an annualised basis.
As a result, the IMF shaved 1.1 percentage points off its 2014 US growth forecast, lowering it to just 1.7 per cent this year.
Europe’s fortunes were mixed. Germany and Spain were upgraded, but France and Italy suffered downgrades of 0.3 per cent this year. France is now predicted to grow by just 0.7 per cent this year. Germany is also predicted to grow more slowly than the UK this year and next.
http://www.thetimes.co.uk/tto/business/ ... 157300.ece