The International Monetary Fund (IMF) has upgraded UK growth for the second time in four months to further reflect the resilience of the domestic economy so far in 2017.
In its latest World Economic Outlook, the IMF increased its UK GDP growth forecast by 0.5 percentage points to 2% for 2017, the biggest upgrade of any major economy meaning it is expected to grow faster than all other G7 economies besides the US.
In January, the IMF revised its UK forecast by 0.4 percentage points to 1.5% on stronger forecasted figures, meaning the country has seen an upward revision of 0.9 percentage points in total so far in 2017.
The IMF said in the report: "The 0.9 percentage point upward revision to the 2017 forecast…reflects the stronger-than-expected performance of the UK economy since the June Brexit vote, which points to a more gradual materialization than previously anticipated of the negative effects of the United Kingdom's decision to leave the European Union."
Despite the upgrade for 2017, the IMF said the medium-term growth prospects for the UK had diminished due the Brexit effect.
The report said the IMF expected an increase in trade and migration barriers and a downsizing of the financial services sector "amid possible barriers to cross-border financial activity".
The revision of UK growth comes hours after Prime Minister Theresa May stressed the resilience of the economy after she called a snap General Election for 8 June.
She said: "Despite predictions of immediate financial and economic danger, since the referendum we have seen consumer confidence remain high, record numbers of jobs, and economic growth that has exceeded all expectations."
Maurice Obstfeld, economic counsellor and research department director at the IMF, said the move could have been done to ensure less economic uncertainty further down in the Brexit negotiations.
He said: "It could be a trade-off of more uncertainty on 8 June for less uncertainty later. The UK is entering a complicated and difficult negotiation with the other 27 countries of Europe."
Turning to inflation, the IMF predicted the increase in energy prices and sterling's depreciation will push UK inflation up to 2.5% for the whole of 2017, but said it would fall back to the Bank of England's 2% target over the next few years. UK inflation remained at 2.3% in March.
Overall, the IMF upgraded its global growth forecast by 0.1 percentage points to 3.5% for 2017.
Obstfeld said: "Momentum in the global economy has been building since the middle of last year. Acceleration will be broad based across both advanced and developed markets."
Despite positive signs of growth in Europe, with the forecast for the area revised up by 0.1 percentage points to 1.7%, the IMF predicted political uncertainty could have an effect on economic activity.
The report said: "The modest recovery is projected to be supported by a mildly expansionary fiscal stance, accommodative financial conditions, a weaker euro, and beneficial spillovers from a likely U.S. fiscal stimulus; political uncertainty as elections approach in several countries, coupled with uncertainty about the European Union's future relationship with the United Kingdom, is expected to weigh on activity."
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