Britain’s growth prospects have been upgraded by more than any other major advanced economy, according to forecasts that risk being thrown into jeopardy by Rachel Reeves’s tax raid.

Just days before the Chancellor delivers her maiden Budget on Oct 30, the International Monetary Fund (IMF) predicted the UK economy would grow by 1.1pc this year.

This is more than double its estimate of 0.5pc just six months ago, and represents the biggest upgrade of any G7 economy this year.

By contrast, the IMF downgraded its outlook for Germany and Japan, warning that Europe’s biggest economy would stagnate in 2024.

The IMF also suggested that the Bank of England should be prepared to cut interest rates faster. Pierre-Olivier Gourinchas, the IMF chief economist, warned that central banks around the world risk keeping interest rates “too tight for too long”.

In a further boost for Ms Reeves, the Fund predicted UK economic growth will “accelerate” in the coming years even as other major economies, including the US, start to slow.

“Growth is projected to have accelerated to 1.1pc in 2024 and is expected to continue doing so to 1.5pc in 2025 as falling inflation and interest rates stimulate domestic demand,” the IMF said in its latest World Economic Outlook.

However, the IMF noted that its expectation for higher UK growth was driven by falling interest rates and assumptions based on the last Tory government’s tax-and-spending policies.

Business groups, economists and entrepreneurs have already warned that Labour’s expected wave of higher taxes will dampen growth while raising little money for the Exchequer.

While Treasury officials have warned the Chancellor that targeting wealth and capital gains will not raise as much as first thought, Cabinet members have suggested in recent days that high earners and businesses will bear the brunt of a £35bn tax raid to fund a major boost for the NHS.

The IMF’s analysis also suggested that UK debt was not currently on course to fall by the end of the decade, with net debt expected to rise to 96.4pc of GDP in 2029. The Fund warned in May that higher spending was likely over the next five years because of growing pressures on public services.

It follows an earlier warning by the IMF that it would be “undesirable” for Ms Reeves to balance the books just through tax rises.

While Mr Gourinchas declared “the global battle against inflation is almost won”, he added that “downside risks are increasing and now dominate the outlook”.

The IMF’s chief economist said: “An escalation in regional conflicts, especially in the Middle East, could pose serious risks for commodity markets. Shifts toward undesirable trade and industrial policies can significantly lower output relative to our baseline forecast. Monetary policy could remain too tight for too long, and global financial conditions could tighten abruptly.”

Inflation, as measured by the consumer prices index, fell to 1.7pc in September, below the Bank’s 2pc target, prompting investors to cement bets on a November rate cut.

While the IMF stressed the dangers of keeping interest rates too high for too long, it added that price rises for services remained “too elevated”. It added that the post-lockdown inflationary spike may have permanently entrenched a desire to ensure pay keeps up with prices.

Mr Gourinchas said: “While inflation expectations have remained well anchored this time around, it may be harder next time, as workers and firms will be more vigilant in protecting their standards of living and profits going forward.”

Investors expect UK interest rates to fall to 4pc by next spring in a far faster drop than markets predicted just six months ago, while the IMF believes the Bank will reduce interest rates to below 4pc by the end of 2025 because of stubborn services prices.

The IMF left its forecasts for global growth almost unchanged at 3.2pc this year and next, but predicted US growth had peaked and was likely to slow in the years following November’s presidential election.

Germany’s growth at the end of the decade is expected to be just half the average rate recorded in the 10 years to 2015.

The IMF also predicted that China would fail to meet its 5pc growth target this year, instead expanding by 4.8pc. It repeated its prediction that Chinese growth will climb barely above 3pc by the end of the decade.