The UK’s economy will grow faster than expected this year as the country bounces back from the devastation of Covid-19, according to a new report.
The International Monetary Fund (IMF) said it expects UK economic output to grow by 7% this year.
It is a large increase from the 5.3% growth that the body’s economists had predicted in April.
“There are positive signs that our economy is rebounding faster than initially expected, with the IMF forecasting the UK to have the joint highest growth rate in 2021 among the G7 economies,” said Chancellor Rishi Sunak.
Of all the G7 nations, the UK was the worst hit in 2020, with output dipping 9.8%.
This year’s 7% growth puts the UK neck and neck with the US, but the American economy merely shrank by 3.5% last year, suffering far less than Britain.
Economists also downgraded their growth predictions for next year by 0.3% to 4.8%.
“We still face challenges ahead as a result of the impact of the pandemic, which is why we remain focused on protecting and creating as many jobs as possible through our Plan for Jobs,” Mr Sunak said.
The IMF’s World Economic Outlook also highlighted a widening gap between richer and poorer countries as they look to recover from the pandemic.
“Growth prospects for advanced economies this year have improved by 0.5 percentage points, but this is offset exactly by a downward revision for emerging market and developing economies driven by a significant downgrade for emerging Asia,” said Gita Gopinath, the body’s chief economist.
Advanced economies are also expected to see a stronger recovery next year, she added.
The estimates highlight global inequality, not least as nearly 40% of people in advanced economies have been fully vaccinated, compared with just 11% in emerging markets and a “tiny fraction” in low-income developing countries.
Meanwhile, per capita income has dipped just 2.8% in advanced economies, compared with 6.3% for emerging market and developing economies, excluding China, according to IMF estimates.