The International Monetary Fund has revised its forecast upgrading Britain’s economic growth prediction to 3.2% for 2014. Britain is now expected to grow faster than any of the other G7 nations including America, Germany and France.
The Prime Minister responded to the IMF’s figures saying they are a sign of “more jobs and more security for families”.
While Danny Alexander, the Liberal Democrat Chief Secretary to the Treasury, said it proved that Britain was “in the fast lane of recovery”.
The positive comments will put a smile on George Osborne’s face, especially after the IMF were originally less than encouraging when the Chancellor first spoke of his austerity measures. Accusing him of ‘playing with fire’, they were adamant he needed a ‘Plan B’ to stimulate growth; however figures which are soon to be released are set to confirm that the economy is now larger than it was before the recession and that Osborne’s measures have had the desired effect and not jeopardised growth.
Upon the upgrade of the growth forecast by the International Monetary Fund, Osborne was quick to say: “The IMF has upgraded their 2014 forecast for the UK by more than any other major economy. The Government’s long-term economic plan is working. But the job is not yet done and so we will go on making the assessment of what needs to be done to secure a brighter economic future.”
There is no doubting that the figures are great news for Osborne. With the right bit of spin and media coverage, his reputation as Chancellor could steadily be enhanced off of the back of this.
Assuming the Chancellor continues his plan to fully privatise Lloyds, the government’s balance sheet could look extremely healthy come 2015. Coupled with falling unemployment and inflation being within the desired target, Osborne’s economic reputation looks good with the general election fast approaching.
Unfortunately though, we are still a long way away from the majority of people feeling the benefits of economic growth and it’s important to note that it only takes one hiccup in the incredibly fragile Eurozone to push Britain backwards once more.
The UK economy is by no means in a perfect state. Figures have suggested that the construction and manufacturing sectors and wage growth continues to fall behind the growth in the economy.
Lack of wage growth is a huge issue and pinpoints the fact that economic growth is not being felt by most. The shadow Chancellor Ed Balls was quick to pick up on this and also noted 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.”