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IMF ‘impressed’ with UK economy

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21/12/2006

The International Monetary Fund (IMF) has rated the UK’s economy “impressive” and UK investment in it should continue to grow.

The report, which is mainly positive on the prospects for the UK economy, predicts “continued strong growth” and an inflation rate well within Chancellor Gordon Brown’s target, giving UK investment a good chance to thrive in the year ahead.

The report said: “Depending on evolving prospects for wage growth, some further tightening of monetary policy might be needed. If wages are overly high, this could lead to inflationary pressure, and this needs to remain on target to safeguard UK saving and investment.”

The report also looks at the Golden Rule – Gordon Brown’s dictum that states no more should be borrowed than spent in any economic cycle – and broadly supports it.

“Continuing commitment to the framework during the prospective period of strong growth will help ensure that good times are indeed used to reduce the underlying fiscal deficit.”

The IMF is certainly aware of the economic pressures that the Chancellor will have to ease if he is to keep a tight rein on spending and set realistic targets for the years ahead. In particular, “taming energy price-related inflation remains a stern challenge for the UK investment arena.”

 

 

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