IMF says UK to avoid recession in boost for Sunak
Further evidence has emerged that Britain will not suffer a recession this year, nor will it have the weakest economic growth in the group of seven leading industrialised economies.
In a welcome boost to Rishi Sunak’s immediate and long term prospects, the International Monetary Fund (IMF) has reversed an earlier prediction that Britain would face the worst 2023 of any G7 nation.
It now expects the UK economy to grow by 0.4% this year, having only last month forecast a 0.3% contraction.
It is also much stronger than the “near zero” growth rate the IMF has pencilled in for Germany which is teetering on recession.
Speaking in London, the IMF’s managing director Kristalina Georgieva said the upgraded growth figure had been sparked by falling energy prices, easing concerns over Brexit and improved financial stability.
She added that the government had taken “decisive and responsible steps in recent months”.
But Ms Georgieva also said now was not the time to look at cutting taxes, warning that at the moment “neither is it affordable, nor is it desirable”.
The IMF’s latest assessment of the UK economy – contained in its Article IV report – follows a similarly more upbeat view from the Bank of England, amid signs that household spending and business activity were holding up better than feared despite the cost of living crisis.
Chancellor Jeremy Hunt said: “Today’s IMF report shows a big upgrade to the UK’s growth forecast and credits our action to restore stability and tame inflation.
“It praises our childcare reforms, the Windsor Framework [the post-Brexit plan for Northern Ireland] and business investment incentives.
“If we stick to the plan, the IMF confirm our long-term growth prospects are stronger than in Germany, France and Italy… but the job is not done yet.”
Despite the more positive outlook, the IMF says interest rates would have to rise even further as inflation is not expected to return to its 2% target until mid-2025.