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Britain’s economy will grow faster than any major economy in Europe as it rebounds from the COVID-19 recession and emerges from lockdown, the International Monetary Fund (IMF) has predicted.

In the latest update to its World Economic Outlook – its periodical look at the state of the global economy – the IMF forecast that the UK economy would grow by 7% this year, the strongest year for economic growth since comparable records began following the Second World War.

The UK’s forecast growth rate would represent the joint-strongest rate in the group of seven leading industrialised nations alongside the US, which is also expected to expand by 7%.

Gita Gopinath, Economic Counsellor and Director of the Research Department at the International Monetary Fund (IMF), speaks during a news conference in Santiago, Chile, July 23, 2019
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IMF chief economist Gita Gopinath said it estimated the pandemic had reduced per capita incomes in advanced economies by 2.8%

The UK growth rate this year is stronger than Germany (3.6%), France (5.8%) and Italy (4.9%), though the UK economy contracted more than those other countries in 2020.

The IMF’s updated forecasts also anticipate the UK growing by 4.8% next year, implying that the UK economy will regain its pre-COVID levels around the turn of the year.

However, while the UK is expected to rebound quickly, it is not expected to regain all the lost potential growth sacrificed during the pandemic – something which is not true of the US, which the IMF expects to be stronger, on a GDP basis, following the pandemic than was anticipated before it struck.

The IMF said that the main fault line in the global economy in the coming years would be between those countries with high vaccination rates and those mostly emerging economies with lower levels of immunisations.

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Its chief economist, Gita Gopinath, said: “We estimate the pandemic has reduced per capita incomes in advanced economies by 2.8%, relative to pre-pandemic trends over 2020-2022, compared with an annual per capita loss of 6.3% a year for emerging market and developing economies (excluding China).”

Considering the likely impact of the Delta variant of COVID, the IMF said: “In countries with high vaccination coverage, such as the United Kingdom and Canada, the impact would be mild; meanwhile countries lagging in vaccination, such as India and Indonesia, would suffer the most among G20 economies.”

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CBI: Long-term outlook for UK economy ‘still very positive’

In spite of growing disquiet about rising prices of goods and services around much of the developed world, the Fund said it expected high inflation levels to abate in the coming years, saying that many of the price rises reflected temporary factors.

However, it added that this was “subject to significant uncertainty given the uncharted nature of this recovery”.

“More persistent supply disruptions and sharply rising housing prices are some of the factors that could lead to persistently high inflation,” the IMF said.

“Further, inflation is expected to remain elevated into 2022 in some emerging market and developing economies, related in part to continued food price pressures and currency depreciations – creating yet another divide.”

Chancellor Rishi Sunak said of the Fund’s findings: “There are positive signs that our economy is rebounding faster than initially expected, with the IMF forecasting the UK to have the joint highest growth rate in 2021 among the G7 economies.

“That said, we still face challenges ahead as a result of the impact of the pandemic, which is why we remain focused on protecting and creating as many jobs as possible through our Plan for Jobs.”

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Tata Steel workers to hold ‘all-out indefinite strike’ in July, Unite says

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Tata Steel workers to hold  'all-out indefinite strike' in July, Unite says

Around 1,500 workers at Tata Steel will hold an “all-out indefinite strike” next month, a union has announced.

The industrial action at the company’s sites in Port Talbot and Llanwern, Newport, will begin on 8 July, Unite said.

The union said the walkout would “severely impact” the company’s UK operations.

It comes in response to plans to close Tata Steel’s blast furnaces in South Wales, putting 2,800 jobs at risk.

The union said it would be the first time in more than 40 years that steel workers in the UK have gone on strike.

Members voted in favour of the move in April.

Industrial action short of a walkout, including staff working to rule and a ban on overtime, began earlier this week.

The union’s general secretary Sharon Graham said: “Tata’s workers are not just fighting for their jobs – they are fighting for the future of their communities and the future of steel in Wales.

“Our members will not stand by while this immensely wealthy conglomerate tries to throw Port Talbot and Llanwern on the scrap heap so it can boost its operations abroad.”

She added: “The strikes will go on until Tata halts its disastrous plans.

“Unite is backing Tata’s workers to the hilt in their historic battle to save the Welsh steel industry and give it the bright future it deserves.”

Read more: Port Talbot’s uncertain future as the cost of going green hits home

Tata Steel previously said it was losing £1m a day at Port Talbot and warned the situation was unsustainable.

The company said its plans, which include the building of an electric arc furnace, would mark the beginning of a new way of “competitive and greener” steelmaking.

The proposals were officially confirmed in January, with its boss TV Narendran telling MPs the decision was “pretty much” a done deal.

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Sky News first exclusively revealed details of the plans in September 2023.

Tata Steel initially offered an enhanced redundancy package to workers affected by the proposals, but this was reduced after the industrial action short of a strike began earlier this week.

Unions, including Unite, expect Labour to hold emergency talks with the company if the party wins the upcoming general election.

Alun Davies, national officer for steel at the Community union, which says it represents the “vast majority” of affected Tata workers, said it had decided with the GMB union not to take part in any industrial action for now.

He added: “If the Labour Party wins the general election it has said that it will hold emergency talks with Tata…

“We welcome this, and now feel it is important to wait for the completion of that process before initiating any significant course of action.”

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Former union boss George Thomson denies being ‘too close’ to Post Office as he gives evidence at inquiry

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Former union boss George Thomson denies being 'too close' to Post Office as he gives evidence at inquiry

The former head of a union for sub-postmasters has denied it became “too close” to the Post Office and was “flush with money”.

George Thomson, formerly of the National Federation of SubPostmasters (NFSP), also denied lacking sympathy for those who were wrongfully convicted during the Post Office scandal, which occurred following faults in the organisation’s Horizon IT system.

It comes after the TUC claimed earlier this year that the Communication Workers Union (CWU) had been blocked from effectively organising at the Post Office, and alleged the NFSP was given funds by the Post Office.

Mr Thomson, who served as its general secretary between 2007 and 2018, gave evidence at the Post Office inquiry on Friday.

When asked by inquiry counsel Julian Blake if he became “too close” to the Post Office, he replied: “No, I wasn’t.”

Mr Thomson later added: “We worked closely with the Post Office because we both needed to have a successful franchise – that’s the reality.”

The inquiry was shown an email sent on behalf of Mr Thomson in August 2013 which outlined plans for the Post Office and NFSP to sign a 15-year contract to represent all Post Office operators.

It included annual payments starting at £500,000 in 2013/14 and reaching £2.5m from 2017 to 2028.

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Mr Thomson said it had taken “a lot of badgering” of the then Post Office chief executive Paula Vennells to agree to the deal. He also claimed her team “would have preferred the NFSP withered on the vine”.

Put to him by Mr Blake that they were significant figures, Mr Thomson told the inquiry the NFSP “took on new functions” as part of the deal.

When asked if the NFSP was financially dependent on the Post Office at the time when issues with Horizon were ongoing, Mr Thomson said the federation had lost 8,500 sub-postmasters in the previous 12 or 13 years, and that the money was “replacing what used to be membership money”.

He added: “It was never ever tied to Horizon.”

The inquiry was also shown a Computer Weekly article from May 2009 which detailed the cases of several high-profile sub-postmasters, including Sir Alan Bates.

The sub-postmasters told the magazine their union had “refused to help them investigate their concerns”.

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‘Did the mask slip in this email, Ms Vennells?’

Asked by Mr Blake why the NFSP did not help them, Mr Thomson said the federation had to seek permission from the Post Office first.

He said: “We did fight their cases but we asked the Post Office, ‘What are we to do as an organisation?’

“Every case that was brought to us, we took it up with the Post Office.

“You’re trying to make out that somehow we were flush with money… That’s not correct.”

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Mr Thomson said he had investigated 20 or 30 cases at the “highest level” during his time as general secretary, and would have tried to employ a computer expert had he known more about the issues with Horizon.

He said: “I’ve been around a long time – suspensions have always taken place, prosecutions have always taken place, under the manual system as well.

“We had a franchise that was in crisis and we always tried to help people.”

Mr Thomson described Horizon as “a strong system”. He added: “It’s a well-used system, and I still support it systemically as being very robust.”

However, some former sub-postmasters reacted with anger to his testimony on Friday.

They included Christopher Head, who wrote on X: “[Mr Thomson] and his organisation failed it is main overarching duty to protect its members. They are a disgrace and have no place today to be trying to represent the interests of current Postmasters, they are a sham…

“The NFSP should be completely disbanded.”

More than 700 sub-postmasters were convicted between 1999 and 2015 after errors in the Post Office’s Horizon IT system meant money appeared to be missing from many branch accounts when, in fact, it was not.

It has been branded the biggest miscarriage of justice in British legal history.

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Government net borrowing lower than forecast – but next chancellor ‘facing Pandora’s box’

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Government net borrowing lower than forecast - but next chancellor 'facing Pandora's box'

Government borrowing was less than expected in May, new figures have revealed.

Net borrowing – the difference between public sector spending and income – was £15bn, an increase of £0.8bn on the same time last year, the Office for National Statistics (ONS) reported on Friday.

The amount is below the £15.7bn forecast by the Office for Budget Responsibility (OBR) and less than expected by economists.

However, it was still the highest amount for the month of May since the COVID-19 pandemic.

The ONS also said that public sector net debt, excluding public sector banks, was provisionally estimated at 99.8% of gross domestic product (GDP) in May – the highest level since March 1961.

The figure is also 3.7 percentage points higher than during the same period last year.

Economists said it showed that whoever wins the upcoming general election will face a string of potential financial challenges.

Alex Kerr, from research firm Capital Economics, said that while the better-than-expected net borrowing figure would give a little extra wriggle room for the next chancellor, it would do little to reduce the “scale of the fiscal challenge that awaits”.

He said this included upward pressure on the government’s debt interest bill from higher interest rates.

Mr Kerr estimated that the next chancellor will have financial “headroom” of around £8.5bn at their first post-election fiscal event, slightly less than the £8.9bn left over from the last budget in March.

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Economist Michal Stelmach, from KPMG UK, said the next chancellor was facing a “fiscal Pandora’s box”.

He added: “The fiscal reality is similar for whichever party wins the general election. Interest rates are set to remain higher, debt more difficult to bring down, and spending pressures continue to mount.

“With only nuanced differences in the stated plans for fiscal rules and taxation, borrowing will likely follow a similar path under either government.

“That said, a clear victory would give the winning party a stronger mandate to implement big reforms or increase public investment.”

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