The International Monetary Fund will drop its criticism of the coalition’s economic strategy in its annual report to be delivered today, the FT reports.
According to the paper, the IMF will deliver a more positive assessment of the UK’s economic policy than in previous years in its “Article IV” statement.
The FT says the IMF will not change its forecasts for the UK economy, retaining the April estimates of 2.9 per cent growth in 2014 followed by 2.5 per cent next year.
But the fund will back down on its call for the Government to slow the pace of budget deficit reduction and instead focus on policies which sustain the economic recovery.
The IMF is set to discuss when it is sensible for the Bank of England to begin raising interest rates and highlight the improving housing market as a potential threat to sustained growth.
The report is likely to call for further action to cool the housing market, including looser planning controls and higher land taxation.
In April 2013, IMF chief economist Olivier Blanchard said Britain’s deficit reduction strategy was “playing with fire”. He has since said he is “pleasantly surprised” by Britain’s economic recovery.