Jeremy Hunt has claimed that “Britain is back” after international concern about the economy under Liz Truss.
Speaking to the BBC at the International Monetary Fund’s (IMF) Spring Meetings in Washington, the Chancellor said: “Other finance ministers are telling me that ‘Britain is back’ and they’re very happy because we always play a very big role in helping to solve global problems.”
It follows a huge wave of criticism at the IMF’s last meeting in October after Ms Truss’s proposed tax cuts created market panic.
Despite Mr Hunt’s optimism, the IMF warned that Britain will still be the worst-performing large economy in the world this year, even after a significant upgrade in its forecasts.
Stronger than expected economic performance so far this year means UK GDP is on track to contract by 0.3 per cent across 2023, half the 0.6 per cent decline the IMF forecast in January, according to its latest World Economic Outlook.
It means the UK will remain the world’s worst-performing large economy. In Russia, which has been targeted by wide-ranging sanctions from Europe and the US in the wake of the Ukraine war, GDP is forecast to grow by 0.7 per cent this year.
Britain’s GDP is also expected to shrink more than Germany’s, which is struggling to escape recession and recover from soaring energy prices. The IMF predicts Europe’s largest economy will shrink 0.1 per cent.
The economic forecast comes as inflation hit 10.4 per cent in February combined with a wave of industrial action.
Despite calls for pay rises, Mr Hunt said it was important to risk increasing inflation any further.
Mr Hunt also said he wants “big reform” of the pensions system to boost payouts.
He suggested copying Australia and Canada to let funds invest in lucrative but potentially riskier assets such as infrastructure.
Mr Hunt said defined contribution schemes will offer the "biggest opportunities to unlock investment into high growth British industries".
He said: “My concern is that pensioners and future pensioners are not getting the returns they could expect.
“Countries like Australia and Canada have found a way of making sure that they get better returns by consolidating their pension fund industry in a way that makes it easier for them to invest in unlisted and potentially higher growth vehicles.
“That’s the thing I think needs to be worked on.”
