UK economy to outstrip its rivals as 'tensions' in Europe intensify
Britain will be the best-performing major economy in Europe this year, according to the latest forecasts from the International Monetary Fund.
The UK economy will grow by 0.6 per cent in 2012 – far weaker than previously thought but much better than the 0.5 per cent contraction expected in the eurozone.
Germany is set to grow by just 0.3 per cent and France by 0.2 per cent, while Italy and Spain face at least two years of deep recession, the IMF predicted.
On the rise: The UK economy will leapfrog those of France and Germany
The forecasts were included in a draft copy of its World Economic Output report leaked last night ahead of official publication next week.
The report warns that the global recovery is threatened ‘by the growing tensions in the euro area’.
Jonathan Loynes, chief European economist at London-based research group Capital Economics, said: ‘2012 looks like crunch-year for the eurozone.
'Either the policymakers will finally deliver the much-promised bazooka or the currency union could cease to exist in its current form. We think the latter is more likely.’
The IMF cut its growth forecasts for Britain from 1.6 per cent this year and 2.4 per cent next year to 0.6 per cent this year and 2 per cent next year.
But the UK will still lag behind the rest of the developed world, with the IMF predicting U.S. growth of 1.8 per cent this year, growth of 8.2 per cent in China and 7 per cent in India.
Miliband is calling for more stringent lending to the European countries
The IMF – the world’s lender of last resort – now estimates that the global economy will grow by 3.3 per cent in 2012, down from its previous prediction of 4 per cent.
The Treasury refused to comment on the leaked IMF report.
Meanwhile Ed Miliband has signalled that his Labour MPs will stop extra British cash going to the IMF unless eurozone countries sort out their own bailout fund.
Last year, his party’s MPs opposed an increase in funding – and if they did so again, they could inflict a humiliating defeat on the Government by joining forces with Tory Eurosceptics.
The IMF needs to raise another £390billion to increase its firepower, it said this week. Britain could be expected to provide another £17.5billion in loans but this would need to be voted through Parliament.
Mr Miliband told the Daily Mail: ‘Let’s sort the problems of the eurozone with proper backing from eurozone countries and European Central Bank.
‘A patched-up, sticking plaster solution with a bit of money from here, a bit of money from there, “Let’s go to the Chinese” and all of that, that is not the answer.
‘The IMF can always play a role but I don’t think it’s about making up for inadequate action by the eurozone. We’ll judge any IMF proposal on that basis.’
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