The UK will be the fastest growing major economy this year according to revised projections by the International Monetary Fund (IMF).

The IMF upgraded its forecasts for UK growth by more than any other G7 economy, saying that cheaper credit and increased consumer confidence had resulted in more optimistic growth than expected.

It’s the first time since April 2008 that the UK economy is forecast to grow faster than the US or Germany, with growth  now forecast at 2.9% for 2014, revised upwards from 2.4% in January and 1.9% last October. In comparison, the US economy is forecast to grow at 2.8%, Canada at 2.3% and Germany at 1.7%.

Olivier Blanchard, chief economist for the IMF, said:

“It is fair to say that our forecast was too pessimistic, and indeed growth has been much stronger than we had forecast. II think it has to be said that we are in the business of forecasting. Forecasting is an imperfect science and sometimes we over-estimate or under-forecast.”

The IMF also praised policies announced in Budget 2014 to boost capital spending, including doubling the annual investment allowance for businesses to £500,000.

However, it also warned that the UK’s recovery was “far from assured”, due to its unbalanced nature.

Photo by David Joyce