The International Monetary Fund has signalled that Britain is likely to avoid recession, upgrading its economic forecast for both this year and next.
The surprise move came as the Washington-based institution updated its closely watched economic projections – also sharply increasing its forecast for the US. The IMF raised its estimate for 2008 UK growth from 1.6% to 1.8%, and lifted its 2009 projection by 0.1% points to 1.7%.
The move will come as a welcome relief for Chancellor Alistair Darling, who is preparing to downgrade his own optimistic growth forecasts of 2% and 2.5% for this year and next respectively in his Pre-Budget Report this autumn. However, with many City experts warning that Britain may already be in recession, the revisions may be greeted with scepticism in the Square Mile.