The British economy is experiencing a larger than expected growth spurt. As a result, Britons are likely to avoid a recession, the International Monetary Fund reports. The Fund has increased its estimates significantly because households are spending more and because relations with the European Union have improved.
The International Monetary Fund reports that lower UK energy prices are pushing economic growth by 0.4%. This makes the IMF more positive than last month, when it expected a rate of 0.3 percent. If the economy actually grows by 0.4%, the UK will fall out of last place among the G7 economies with the lowest economic growth, according to the IMF. This means that Britain’s economic growth is outpacing Germany’s, among other countries.
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The global economic watchdog has already warned households that interest rates are likely to rise further and remain high to ensure inflation is tackled. British Prime Minister Rishi Sunak’s government will be optimistic about the upcoming election because of the prospect of faster growth, but also because it is expected that tax cuts can be made.
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The Conservatives are already lagging behind the opposition Labor Party in opinion polls, due to the high inflation that the country is suffering from. Weak economic growth, strikes in the public sector and high taxes also play a role.
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Sunak is trying to restore the government’s reputation on the economic front after the problems caused by the economic plans of former Prime Minister Liz Truss. As a result, the value of the pound fell sharply and bond markets crashed.
