UK leads developed world on growth, reveals IMF report

International Monetary Fund data puts Britain ahead of the rest of the developed world in terms of economic growth.

Positive news continues to flood in for Britain’s economy, and businesses and households are seeing the light at the end of the tunnel. In fact, the UK’s economic growth is ahead of every other country in the developed world, according to new calculations from the International Monetary Fund (IMF).

In an update to the World Economic Outlook it published in April, the IMF revised its projections for UK growth by 0.4 percentage points. That takes the total up to 3.2 per cent this year – faster growth than in any other developed nation.

Growth is still expected to be slower in 2015 as the UK economy adjusts, but an extra 0.2 percentage points were added to that forecast to reach 2.7 per cent.

Overall, this means the UK has seen bigger revisions for both 2014 and 2015 than every other developed country in the fifth consecutive round of increased forecasts.

The Financial Times reports that the IMF is actually more confident in the UK than many of its own institutions, with its projections now outstripping those of independent forecasts and the Office for Budget Responsibility. The Bank of England is predicting even quicker growth, but it remains out in front of the pack.

With Britain now expected to outstrip the likes of European rivals France and Germany and even the superpower that is the US, it appears that the UK has finally managed to shake off the shadow of the financial crisis.

Indeed, new preliminary data from the Office for National Statistics shows that gross domestic product rose by 0.8 per cent on an annual basis in the second quarter of 2014.

But given that the organisation also calculates that from its peak at the start of 2008 to its lowest point in 2009, the economy shrank by 7.2 per cent, it is remarkable that these figures show the economy has surpassed its pre-recession peak. Even so, John Hawksworth, chief economist at PwC, says there is still work to do.

“This GDP data took us past a symbolic landmark, with the level of UK output now slightly above its pre-recession peak,” he explains.

“But population has also been rising, so average income per person is still around 4% below previous peaks at the end of 2007 on our estimates. It will be some years yet before average real incomes have fully recovered the losses suffered during the recession.”

< Top image: Chatham House >