IMF backs health of UK economy but calls for release of green belt land

Hopes of an interest rate cut have been raised after the International Monetary Fund (IMF) suggested the UK economy is recovering faster than expected.

An interest rate cut over the summer months could bring down the cost of borrowing, lowering mortgage pricing and providing a boost to the property market.

The IMF report said the UK economy is now approaching a soft landing following a mild technical recession in 223.

Its research suggested inflation has fallen faster than expected last year and could reach the Bank of England’s 2% target by early 2025.

The IMF said: “As monetary policy reaches an inflection point, the timing and pace of rate cuts must carefully balance the risks of premature and delayed easing. 

“Fiscal policy has been appropriately tight, but difficult choices will need to be made over the medium term to stabilize public debt, given significant pressures on public services and critical investment needs.”

The IMF said the banking system remains healthy, but continued vigilance of all banks is warranted. 

Its report also suggested that the current “localised and discretionary system of decision-making” for planning is “overly stringent and unpredictable.”

The IMF said: “It hinders new construction (both residential and commercial) and infrastructure projects, restricting labour mobility as workers stay trapped in suboptimal jobs due to unaffordable housing in areas with better prospects.”

The report proposed broader geographic and rules-based decision-making for business and large residential developments to reduce uncertainty for investors, digitised and and standardised plans at the local level which are, additionally, binding for designated growth areas and targeted incentives to overcome new builds resistance and resources to local authorities as well as a careful review of scope to release green belt land of little environmental or amenity value near stations with easy access to major cities.