Britain is not anticipated to endure a recession this 12 months, nor will it have the weakest financial progress within the group of seven main industrialised economies, the International Monetary Fund (IMF) stated at the moment.
Unveiling a dramatic improve to its outlook for Britain, the Fund, which beforehand predicted Britain would face the worst 2023 of any G7 nation, stated that in truth the UK would develop by 0.4% this 12 months.
While this stays weak, it’s nonetheless stronger than the 0.7% contraction beforehand forecast and stronger than the “near zero” progress fee the IMF has pencilled in for Germany.
The information, contained within the IMF’s newest particular person evaluation of the UK economic system, its so-called Article IV report, will doubtless be welcomed by the chancellor, following a stream of damaging forecasts from main establishments.
However, the Fund stated that the affect of the price of residing disaster will proceed to trigger ache throughout the economic system.
“Given transmission lags,” it stated, “sizeable rate [interest rate] hikes implemented since August are expected to have their peak impact on demand and inflation from the second half of 2023.”
It added that rates of interest – already at 4.5% having risen twelve successive instances since late 2021 – must rise even additional.
“Inflation is projected to return to the 2% target only by mid-2025, six-months later than in staff’s April forecast, and risks to this trajectory are tilted to the upside. Accordingly, some further monetary tightening will likely be needed, and rates may have to remain high for longer to bring down inflation more assuredly.”
Chancellor Jeremy Hunt stated: “Today’s IMF report reveals a giant improve to the UK’s progress forecast and credit our motion to revive stability and tame inflation.
“It praises our childcare reforms, the Windsor Framework 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.”
Source: information.sky.com”