Bad news for Osborne: US set to grow faster than UK

George Osborne has taken to opening his Budget speeches with great news about the impressive growth of the UK - powering ahead of rivals including Europe and the US. However, he's going to have to come up with a new opening number next time, because according to the IMF, the US is set to outgrow us this year.

This week Osborne clearly relished the opportunity to tell the nation that the UK is "growing faster than any other major advanced economy" - almost as much as he enjoyed saying that it was proof that his "long term economic plan is working."

His assertion was based on the figures from the Office of Budget Responsibility which says the UK is set to grow 2.4% this year, which he added was faster than the US and Germany and "twice as fast as France."

Figures out today from the International Monetary Fund don't argue with the OBR: the UK is still expected to grow 2.4% this year. The problem with Osborne's pronouncements is that the IMF now expects the US economy to grow by 2.5%. That would mean that the US is now "growing faster than any other major advanced economy".
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What went wrong?

Growth in the UK has been disappointing in 2015. In the first three months of the year, the construction and production industries performed worse than expected, and while the massive service sector increased 0.5%, the growth was slower than it had been at the end of last year.

A survey by the CBI suggests that official figures will show the economy slowing again between April and June this year. It said that the strength of the pound was playing a part, as it made exported products more expensive for overseas buyers, which put the brakes on exports.

The only hope Osborne can take from the figures is that the IMF is optimistic generally about the outlook for advanced economies. It said: "The underlying drivers for a gradual acceleration in economic activity in advanced economies – easy financial conditions, more neutral fiscal policy in the euro area, lower fuel prices, and improving confidence and labour market conditions – remain intact."

He can also take some crumbs of comfort from the fact that the UK remains ahead of the Euro Area in growth terms, as it only managed 1.5% growth this year and is forecast to grow 1.7% next year - despite a surprisingly strong performance from Spain. He can also boast that this year the UK is still expected to grow twice as fast as France - for what it's worth.

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