21/01/2014 10:01 GMT | Updated 25/01/2014 16:01 GMT

IMF Raises 2014 UK Growth Forecast In Boost For George Osborne

Dan Kitwood via Getty Images
LONDON, ENGLAND - JANUARY 15: Chancellor of the Exchequer George Osborne speaks on EU reform in central London on January 15, 2014 in London, England. Mr Osborne delivered a warning to Britain's European partners that it should undergo reform, halting decline by backing business and curbing welfare spending if the UK is to remain a part of Europe. (Photo by Dan Kitwood/Getty Images)

George Osborne has received a massive boost this week as the International Monetary Fund sharply upgraded its growth forecast for the UK.

As expected, the IMF lifted its projection for the UK's growth this year from 1.9% to 2.4%, which would be the fastest rate of any major European economy. However, the UK's growth would then fall to 2.2% in 2015.

IMF chief economist Oliver Blanchard said: "Conditions are increasingly favourable in the UK and the euro core. Public debts are on sustainable paths, and fiscal consolidation is, rightly, slowing down. Credit conditions are favourable."

The Treasury welcomed the UK upgrade, which was the largest for any of the the advanced G7 countries. "Today's report provides further evidence that the government's long term economic plan is working," a spokesman said.

"But the job is not yet done and so the government will go on taking the difficult decisions necessary to deliver a sustainable recovery for all."

This upgrade comes soon after the Ernst and Young ITEM Club upped its growth forecast for the UK to 2.7% this year.

The Treasury welcomed the IMF"s revised forecast, with a spokesman saying: "Today's report provides further evidence that the government's long term economic plan is working."

Despite the IMF's increasing positivity about the UK's growth prospects, shadow chancellor Ed Balls warned the UK still was in the "slowest recovery for 100 years".

He added: “With business investment still weak and the IMF forecasting that UK growth will slow down again next year, it’s clear that this is not yet a recovery that is built to last. Simply to catch up all the lost ground since 2010 we need 1.5 per cent growth each quarter between now and the election.

"Instead of more complacency from George Osborne we need Labour’s plan to secure a stronger recovery and earn our way to higher living standards for the many, not just a few at the top. That means reforms to our banks and energy market, expanding free childcare to make work pay, a compulsory jobs guarantee and a plan to build 200,000 new homes a year.”

The IMF's increasing positivity about the UK's growth prospects marks a notable change from its chief economist's warning last year that Osborne was "playing with fire" by pursuing his austerity agenda.

The chancellor said at the time: "The chief economist has a well known set of views on this which he has expressed in various forms over several years."

"What the IMF has said, actually, is that the United Kingdom is forecast to grow more than Germany, than France, than the rest of the eurozone."