UK economy flourishing, says IMF

BRITAIN is set to be one of the world's fastest-growing economies in 2004, the International Monetary Fund is expected to state today.

In its World Economic Outlook, the IMF will sharply raise its forecast for UK growth to 3.5%, leaks of the document suggest.

That is at the top of Chancellor Gordon Brown's predicted

range of three% to 3.5%, previously derided by many economists as far too optimistic.

It also means that Britain's economy is expanding twice as fast as the eurozone.

Mr Brown has repeatedly defied his critics with better than expected growth figures.

Growth has been fuelled by strong consumer spending and there are signs that the recovery in the manufacturing sector is gathering strength.

The Washington-based IMF is likely to repeat its warning of last autumn that the UK property market is vulnerable to a rise in interest rates.

The Bank of England had been expected to increase rates next month. But a surprise drop in inflation for March has raised hopes that the base rate will stay at four%.

The consumer price index rose by 0.2% to a yearon-year rate of 1.1%, compared with a forecast of 1.3%.

The IMF is expected to say that the global economic outlook has improved, but the threat of terrorism and surge in oil prices raise questions over whether that can be sustained.