Britain will grow at a faster rate than Germany and France, the International Monetary Fund (IMF) has said – just weeks after it claimed a vote for Brexit would be an economic disaster.
Despite previously claiming that leaving the European Union (EU) would lead a recession, the IMF now expects the UK’s economy to grow by 1.7 per cent this year and 1.3 next year. According to the Telegraph, these figures will make Britain the second-fastest growing economy in the G7 next year, behind only the United States.
The figures came as the government announced unemployment had hit a new 11-year-low, a fact cheered on in the Commons this afternoon during Theresa May’s first Prime Minister’s Questions.
By comparison, Germany is expected to grow by 1.6 per cent this year and France by 1.3 per cent.
The figure is still weaker than forecast before the referendum – 1.9 per cent ethis year and 2.2 per cent next year – but nonetheless represent a climb down and suggest a recession is unlikely.
The IMF based its prediction on the fact no serious trade barriers have been put up between Britain and the EU and that there has so far been no serious financial disruption.
Before the referendum, IMF chief Christine Lagarde said that quitting the EU would be “pretty bad to very, very bad” for Britain’s economy. She added that Brexit would result in a “protracted period of heightened uncertainty” for the country, with “sizeable” long term losses in income.
The IMF’s admission comes as the Bank of England says it has seen “no clear evidence” that there will be a heavy economic slowdown after the Brexit vote.
Despite business leaders reporting rising uncertainty, there is no evidence that consumers are spending less.
A majority of firms spoken with did not expect a near-term impact from the result on their investment or staff-hiring plans. But around a third of contacts thought there would be some negative impact on those plans over the next 12 months,” the Bank said.
“As yet, there was no clear evidence of a sharp general slowing in activity.”