Optimistic IMF forecasts show UK economy is moving from rescue to recovery

The guessing game about where the economy is going continues. The International Monetary Fund has just updated its forecasts for the whole world and it is slightly more optimistic about the UK than it was back in April.

It expects growth of 0.9 per cent this year – 0.3 per cent points higher than before. This fits the overall picture that’s been developing of moderately good news. Today we've also learned that forecasts for house prices are the highest since 1999 and retail sales are also growing.

However, hard data about manufacturing and industrial production are weak and the latest update on trade shows that we are still buying more from abroad than we’re selling.

The economy is not fixed, it’s being fuelled by domestic demand which doesn't have sound enough foundations for us (or the Chancellor) to relax. The IMF might be sounding more optimistic but, once again, we can’t hang the bunting out.

In fact I’ve noticed a markedly cautious note in conversations with Treasury officials recently. Today the official comment from them about the IMF’s forecasts focuses on the rather more downbeat take the Washington DC-based organisation has about the rest of the world:

If we’re to export our way out of the doldrums, slowing growth elsewhere will not help.