Britain's economy will grow at a much faster rate than previously predicted, according to the International Monetary Fund (IMF).

The IMF, a global organisation focused on economic stability, said the UK's economy will grow by 2% in 2017 and by 1.5% in the following year.

Just three months ago, the IMF predicted growth of 1.5% this year, and 1.4% the year after.

While the forecast growth for many economies has been increased slightly, the 0.5% rise in predicted UK growth this year is striking - it is, by far, the biggest change made in any of the IMF's forecasts.

In October 2016, the same organisation said it thought the UK economy would expand by just 0.9% in 2017 - six months later, that predicted growth rate has doubled.


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The Chancellor, Philip Hammond, welcomed the IMF's report.

He said: "The fundamentals of our economy are strong and we continue to invest in the skills needed for a stronger and fairer Britain.

"In Washington this week I will be talking to our international partners about how we can carry on increasing global economic growth, with Britain again playing an active and engaged role in the global economy."

Image: The IMF sees UK growth outstripping that of the eurozone

If the IMF is right, then the UK will grow at a faster rate this year than the euro area as a whole, and also quicker than Germany, France and Canada.

However, the growth forecast for 2018, if correct, would see the UK fall slightly behind the single currency zone.

In its regular report on the state of the global economy, the IMF said its new figures reflected "the stronger-than-expected performance of the UK economy since the June Brexit vote."

But it tempered that confidence by saying that "negative effects", including reductions to both consumer spending and investment, had merely been delayed.

Image: Higher shop prices because of a weaker pound are starting to dent consumer spending levels

The report said the UK's "principal challenge will be to successfully navigate the exit from the European Union and negotiate new arrangements for economic relations with the European Union and other trading partners."

But the IMF gave its backing to the Bank of England's decision to persist with historic-low interest rates, describing it as "appropriate because growth is expected to slow."

The Fund also supported the Government's decision to withdraw hard targets for economic policy, saying it was wise to "allow room for short-term manoeuvering and elevated uncertainty about the economic outlook".

Looking at the global picture, the IMF report said it expected worldwide economic growth to increase from an estimated 3.1% in 2016 to 3.5% this year and 3.6% in 2018.

It has generally pushed up forecasts for advanced economies, such as Europe and the United States, but revised down predictions for some developing nations, based on perceived weaknesses in some large economies "especially in Latin America and the Middles East".

Image: The IMF sees the US economy growing by 2.3% this year

Forecasts for both the US and China remain strong with America expected to expand its economy by 2.3% over the course of this year while the IMF predicts Chinese growth of 6.6%.

However, the foreword to its report contains a series of comments that appear aimed at Donald Trump's rhetoric of protecting American jobs.

In it, Maurice Obstfeld, the IMF's chief economist, said: "One salient threat is a turn towards protectionism, leading to trade warfare."

Mr Obstfeld said that "capitulating to those pressures would result in a self-inflicted wound, leading to higher prices for consumers and businesses, lower productivity and, therefore, lower overall real income for households."