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IMF due to raise UK growth forecast to 2.4%

THE International Monetary Fund is today expected to raise its forecast of growth in the UK this year.

Reports yesterday suggested that the IMF would raise its forecast of UK gross domestic product growth in 2014 from the 1.9% rate it projected last October to 2.4%.

Growth of 2.4% would still be below the UK's historical average annual rate of expansion, which was put at about 2.75% by Bank of England Governor Mark Carney in a speech last year.

However, growth of 2.4% this year would be a significant improvement on expansion in 2013. The National Institute of Economic and Social Research, an independent think-tank, forecast earlier this month that the UK economy would have grown by 1.9% last year.

UK GDP figures for the fourth quarter of 2013 are due to be published next week by the Office for National Statistics (ONS).

In June 2010, when Chancellor George Osborne increased the scale of annual public spending cuts and tax hikes to be in place by 2014/15 by £40 billion to £113bn, the UK's Office for Budget Responsibility projected that the UK economy, after growing by 1.2% in 2010, would expand by 2.3% in 2011 and 2.8% in 2012. And it estimated this would be followed by expansion of 2.9% in 2013, and growth of 2.7% in each of 2014 and 2015.

The UK economy grew by 1.7% in 2010. However, growth slowed to 1.1% in 2011, then to just 0.3% in 2012. The 2012 growth rate had been put at just 0.1%, before it was revised up by 0.2 percentage points by the ONS last month.

British Chambers of Commerce last month raised its projection of UK expansion in 2014 from 2.2% to 2.7%. However, it cut its forecast of growth in 2015 from 2.5% to 2.4%.

It has cited a need for an improvement in business investment and exports, highlighting the extent to which consumer spending and a stronger performance by the housing market have been driving the recovery so far.

A survey published last week by Scottish Chambers of Commerce showed that the manufacturing, construction, retail and tourism sectors north of the Border all enjoyed rising activity and confidence in the fourth quarter. But Scottish Chambers warned that recovery was fragile and big challenges remained.

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