The International Monetary Fund (IMF) has admitted it was wrong to predict a UK recession this year as it upgraded its UK growth forecasts for the second time in as many months.

Britain is now expected to grow 0.4pc this year, the IMF said. This is in contrast to a 0.3pc contraction projected just last month, which itself was an upgrade from an even more dour forecast made in the wake of October's mini-budget.

The latest upgrade means the UK is no longer predicted to be the worst performing major economy this year, although the IMF warned that the country’s long term growth prospects were significantly below pre-financial crisis levels.

The Fund said the near-term upgrade was driven by “higher-than-expected resilience” in demand and supply, amid a stronger jobs market and falling energy costs.

The Fund said in its annual evaluation of the UK economy: “Buoyed by resilient demand in the context of declining energy prices, the UK economy is expected to avoid a recession and maintain positive growth in 2023.”

Jeremy Hunt described the forecast as a “big upgrade”, though the Chancellor suggested he would stick to his plan of tax rises to meet a goal to halve inflation this year.

The Fund said stronger growth meant the Bank of England may have to keep raising interest rates from the current 4.5pc level. Threadneedle Street has already lifted rates a dozen times in a bid to get a grip on stubbornly high inflation, which stood at 10.1pc in March.