UK economic growth will outpace the rest of the G7 in 2022, the International Monetary Fund (IMF) has said.
Kwasi Kwarteng’s tax cutting mini-Budget will help Britain to be the fastest growing major economy this year, the Washington-based IMF confirmed in the World Economic Outlook Report which has been released this month.
Tax cuts announced in the mini-Budget are expected to lift it even higher than the IMF’s current forecast of 3.6 percent, which was published yesterday but finalised before the Chancellor’s plans were announced.
The Washington-based IMF’s prediction of 3.6 percent growth in Britain is 0.4 percentage points higher than its forecast in July.
It compares with growth forecasts this year of 1.6 percent for the US, 1.7 percent for Japan, 1.5 percent for Germany, 2.5 percent for France and 3.3 percent for Canada. The UK has the highest growth at 3.6 percent.
Strong momentum at the end of 2021 means UK economic growth will outpace the rest of the G7 this year.
As Dr Azeem Ibrahim, a highly esteemed Research Professor at the Strategic Studies Institute suggests: “The Labour party is ahead in the polls largely on a tide of despair they are fuelling.”
Writing in the Express, the Professor Ibrahim says: “Faster than the rest of the developed world, in fact – and over the Chancellor of the Exchequer’s target of Government are right – and that going for growth, as was always the plan, is in fact achievable. This really matters. After several weeks of jitteriness, things are starting to look all right for Britain Plc.”
Looking at the longterm plan Dr Ibrahim adds: “If the country is to grow by three percent or more per year in the long term, we cannot only make the tax rates saner and more internationally competitive. The Government must allow the country to build and invest, and develop the headroom to defeat future supply shocks – of the kind, caused by Vladimir Putin’s Russia, which is the reason inflation continues to bedevil Europe.
“The Chancellor knows this too – and he cannot allow some of parliament’s spooked horses to force him to back down.
“He must do all in his power to follow through on the prime minister’s promises: the country needs to build a million homes, laboratory spaces, and generate new domestic energy production – onshore wind, new solar farms, fracking, nuclear power – and quick.”
On the global front, the IMF report says world economic activity is experiencing a broad-based and sharper-than-expected slowdown, with inflation higher than seen in several decades. The cost-of-living crisis, tightening financial conditions in most regions, Russia’s invasion of Ukraine, and the lingering COVID-19 pandemic all weigh heavily on the outlook.
The report suggests global growth will slow from 6.0 percent in 2021 to 3.2 percent in 2022 and 2.7 percent in 2023. This is the weakest global growth profile since 2001 except for the global financial crisis and the acute phase of the COVID-19 pandemic.
Global inflation is also forecast to rise from 4.7 percent in 2021 to 8.8 percent in 2022 but to decline to 6.5 percent in 2023 and to 4.1 percent by 2024.
The report says monetary policy should stay the course to restore price stability, and fiscal policy should aim to alleviate the cost-of-living pressures while maintaining a sufficiently tight stance aligned with monetary policy.
The IMF suggest structural reforms can further support the fight against inflation by improving productivity and easing supply constraints, while multilateral cooperation is necessary for fast-tracking the green energy transition and preventing fragmentation.
The IMF’s full report can be found here.