The IMF highlighted that the domestic workforce was smaller today than it was in 2019, compared with a roughly 20pc rise in the foreign-born workforce, even after the UK’s departure from the European Union.

Jeremy Hunt, the Chancellor, said the IMF report shows “that the UK economy is turning a corner”. 

He added: “Inflation in 2024 is predicted to be 1.2pc lower than before, and over the next six years we are projected to grow faster than large European economies such as Germany or France – both of which have had significantly larger downgrades to short-term growth than the UK. 

“This year’s £900 National Insurance tax cuts will also help by filling the equivalent of around one in five vacancies and reducing cost of living pressures.”

The IMF has already urged rich countries like the UK to slash benefits to get more men back into work and improve childcare policies to encourage more women to find jobs.

Mel Stride, the Work and Pensions Secretary, said: “We’ve seen long term sickness related inactivity rise since the pandemic, that’s why we introduced our £2.5bn Back to Work Plan to transform lives and grow the economy. Our welfare reforms will cut the number of people due to be placed in the highest tier of incapacity benefits by over 370,000 – people we will now be helping back to work.

“With real wages up again and millions benefiting from this month’s huge boost to the National Minimum Wage, it is work, not welfare, that delivers the best financial security for British households.”

Average regular earnings in the three months to February rose by 6pc on the year, official figures published on Tuesday showed. This represents a slowdown from the previous pace, but shows wages are growing more quickly than economists had anticipated.