Will Europe’s fastest growth rate be enough to fix Britain’s finances?
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Rachel Reeves has her work cut out as the UK continues to suffer from a long period of low growth, writes Howard Mustoe. The UK’s economy will grow faster than previously thought in 2025, experts have said, in a much-needed bosst for chancellor Rachel Reeves.
The country’s economy will grow 1.6 per cent, the fastest out of Europe’s biggest economies and the third fastest in the G7, after Canada and the US, said the International Monetary Fund (IMF). The boost is being heralded by Ms Reeves as the start of her plan to raise living standards and aid growth.
But Ms Reeves has her work cut out for her, according to economists, following a long period of very low growth for the UK, while government borrowing costs surge. Paul Dales, chief UK economist at Capital Economics, said the upgraded growth figure “certainly helps”. But added: “So I think the IMF will have to upgrade their forecast even more for things to significantly improve for the chancellor.”.
The slightly sunnier figures come after a very disappointing period for the UK’s economy after it was hit by the pandemic. UK growth since the end of 2019 in the UK has been amongst the worst out of big, developed economies, trailing Italy, France and Japan, as well as the US and Canada and the Eurozone as a whole.
During this period, with 2.9 per cent of growth, the UK beat only Germany which grew 0.1 per cent. The US stormed away with 11.5 per cent growth. At the same time, borrowing costs have been rising, which means the government must pay more to service its £2.8 trillion of total debt.
