{
  "title": "IMF Survey : UK Economy Rebounding Strongly",
  "publication": "IMF News, July 28, 2014",
  "sourceUrl": "https://www.imf.org/en/news/articles/2015/09/28/04/53/socar072814a",
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  "summary": "The UK economy is projected to grow by 3.2 percent in 2014, up from 1.7 percent in 2013. Strong growth is fueling rapid job creation, and inflation is expected to remain low, according to the IMF’s assessment.",
  "publishDate": "2014-07-28",
  "sections": [
    {
      "heading": "Growth and headline projections",
      "content": "- The UK economy is projected to grow by 3.2 percent in 2014, up from 1.7 percent in 2013.\n- Growth is strong and becoming more balanced, moving beyond initial dependence on consumer spending."
    },
    {
      "heading": "Drivers of the rebound and labor/inflation dynamics",
      "content": "- Primary drivers in 2014: consumption and investment.\n- Recent pickup in business investment reflects increased firm confidence.\n- Growth has been associated with an increase in consumer confidence and easier credit conditions.\n- Strong growth is fueling rapid job creation.\n- Inflation is expected to remain low; wage growth has been slow and there remains slack in the economy."
    },
    {
      "heading": "Key risks and vulnerabilities",
      "content": "- Domestic risks:\n  - Uncertainty about future productivity growth.\n  - Potential financial risks stemming from the housing market.\n- Housing market specifics:\n  - Housing prices have been growing very rapidly in London, and recently in the rest of UK as well (by about 20 and 10 percent, respectively).\n  - Rapid house price inflation can contribute to financial risks by encouraging borrowers to take mortgages large relative to incomes, increasing vulnerability to interest rate or income shocks.\n  - Fundamental driver: inadequate supply of housing.\n- External risks:\n  - The unwinding of unconventional monetary policies in the U.S.\n  - Weaker-than-anticipated growth in emerging and advanced economies.\n  - Increased geopolitical tensions."
    },
    {
      "heading": "Policy assessment and recommendations",
      "content": "- Macroprudential and housing policy:\n  - Authorities are introducing limits on the share of new mortgages banks can grant that feature very high ratios of loan amounts to borrower incomes.\n  - Banks are being required to run more strenuous tests of loan affordability.\n  - The IMF agrees these “macroprudential measures” are the appropriate first line of defense and supports early action, while noting effects must be monitored and settings may need modification over time.\n  - Political consensus to address inadequate housing supply is essential; recommended actions include lifting unnecessary constraints on development, ensuring the tax system encourages efficient land use, and further developing markets for rental housing.\n- Monetary policy:\n  - Monetary policy should stay accommodative for now, given low and stable inflation, slow wage growth, early-stage recovery, and remaining slack.\n  - Until signs emerge that inflation is rising or that costs are running ahead of productivity growth, monetary policy should continue to support the recovery.\n- Fiscal policy:\n  - The deficit this year is still likely to be very high, at close to 5 percent of GDP.\n  - The planned pace of deficit reduction this year looks appropriate.\n  - Over the medium term, fiscal policy should aim to put debt on a firmly declining path while supporting long-term growth through adequate public investment and safeguarding social needs by protecting social expenditure.\n  - Given the scale of the effort required, authorities should look to measures on both the revenue and expenditure sides.\n- Overall policy mix:\n  - An accommodative monetary policy supporting the recovery, combined with fiscal consolidation aimed at reducing deficits and putting the debt ratio on a downward path, is assessed as appropriate.\n\nIMF Survey: UK Economy Rebounding Strongly, July 28, 2014.\n\n---\n\n Content in this bundle\n\n- Cr14233pdf (PDF){rel=\"external\" type=\"application/pdf\"}\n\n---\n\n References\n\n- https://www.imf.org/en/News/country-focus\n- PRESS CENTER\n- IMF Country Focus\n- In The News\n- Watch video\n- Background papers\n- UK and the IMF\n- https://www.imf.org/en/home\n\nSource: https://www.imf.org/en/news/articles/2015/09/28/04/53/socar072814a"
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    "Published: July 28, 2014",
    "The UK economy is projected to grow by 3.2 percent in 2014, up from 1.7 percent in 2013.",
    "Growth is strong and becoming more balanced, moving beyond initial dependence on consumer spending.",
    "Primary drivers in 2014: consumption and investment.",
    "Recent pickup in business investment reflects increased firm confidence.",
    "Growth has been associated with an increase in consumer confidence and easier credit conditions.",
    "Strong growth is fueling rapid job creation.",
    "Inflation is expected to remain low; wage growth has been slow and there remains slack in the economy.",
    "Domestic risks:",
    "Housing market specifics:",
    "External risks:",
    "Macroprudential and housing policy:",
    "Monetary policy:",
    "Fiscal policy:",
    "Overall policy mix:",
    "[Cr14233pdf (PDF)](/-/media/websites/imf/imported/external/pubs/ft/scr/2014/_cr14233pdf.pdf){rel=\"external\" type=\"application/pdf\"}",
    "[https://www.imf.org/en/News/country-focus](https://www.imf.org/en/News/country-focus)",
    "[PRESS CENTER](http://presscenter.imf.org/)",
    "[IMF Country Focus](https://www.imf.org/en/news/country-focus)",
    "[In The News](https://www.imf.org/en/news/search)",
    "[Watch video](http://www.imf.org/external/mmedia/view.aspx?vid=3697628690001)",
    "[Background papers](http://www.imf.org/external/pubs/cat/longres.aspx?sk=41795.0)",
    "[UK and the IMF](http://www.imf.org/external/country/gbr/index.htm)",
    "[https://www.imf.org/en/home](https://www.imf.org/en/home)"
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