UK News

UK economy basks in IMF upgrade

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Last Updated: Oct 25, 2016

Britain on Tuesday received a double boost on its recovery path from recession that it momentarily acquired and the International Monetary Fund increased the country’s development forecasts by more than for any other major economies.

UK statistics office data indicate factories expansions are quickly than expected in February.

Different surveys have shown strong first quarter for companies and a long-awaited increase in wages.

George Osborne’s (finance minister) expectations to put Britain out of financial crisis appear timely.

He frequents the IMF this week, one year after Fund officials requested him relentlessly to tone down his austerity program for growth to kick off again.

The Fund has raised its forecasts for British growth for the second time in six months, enabling it to reach the current 2.9% before easing to 2.5% in 2015.

However, Britain’s economy is expected to get back to its pre-crisis size during the second quarter of this year, significantly lagging other major economies including Germany and the U.S.

Bank of England policymakers who are expected to meet this will are not in a hurry to increase interest rates from the record low of 0.5% even after inflation decreased. The bank has marked the second quarter of next year as the appropriate time for an interest hike.

The IMF on Tuesday warned of risks from the “surging house prices” stating that its big banking sector might take a hit if growth in emerging economies slowed sharply.

Factories Growth

On Tuesday the pound jumped up with statistics indicating that manufacturing output increased by 1.0% in February from January since the biggest increase in September.

In three years, the highest annual growth rate reached 3.8%.

Economist told Reuters that they expected a month-on-month rise of 0.3% and a 3.1% increase for the year.

On the month, the overall industrial output rose by 0.9%, to recover from weak January when the weather hampered North Sea oil and gas production.

As part of a long-standing attempt to enable Britain’s economy to become less dependent on consumer demand, Osborne last month announced measures to assist the manufacturers.

Many economists said the industrial and manufacturing output numbers indicate Britain’s economy is on course to grow by 1.0% in the first quarter, increasing from 0.7% in the last three month of 2013.

Companies Buoyant, Increase in Wages

A British Chambers of Commerce survey on Tuesday indicated that the six key manufacturing balances as well as investment plans reached all-time highs in the first quarter and services were strong too with exports reaching a record high.

According to a survey by purchasing managers last week, Britain’s factory sector indicated its slowest growth in eight months in March.

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