"Six months ago we were worried about growth in the UK coming back. We've been pleasantly surprised."
- Olivier Blanchard, IMF chief economist
The International Monetary Fund has revised upwards its growth outlook for the U.K. by more than any other advanced economy. Britain is now forecasted to grow 1.4% this year, double the rate predicted in April, when the IMF chief economist Olivier Blanchard criticised George Osborne for his austerity measures. Nevertheless, speaking to the press at the IMF's annual meeting in Washington, Mr. Blanchard acknowledged that he was pleasantly surprised by the U.K.'s performance.
The IMF also upgraded its 2014 forecast from 1.5% to 1.9%, and both the 2013 and 2014 upgrades were the largest of the world's leading seven nations. Although, the U.K. will be one of the three fastest growing G7 countries next year, the financial institution warned that output level would remain below potential for many years. The fund believes that one of the remaining hurdles to stable growth was the Royal Bank of Scotland, underpinning that the health of the two state-intervened banks is vital for credit growth. The IMF believes that "a clear strategy is needed for RBS, with a view to returning it to private ownership". The government is due to announce its plans for RBS, which could include a break-up to move its toxic assets to a separate state-backed institution.
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