May 24, 2023: On Monday, the International Monetary Fund said that it expects the U.K. to avoid entering a slump and “maintain positive growth” in 2023.
The Fund stated that resilient demand in the context of declining energy prices had encouraged the positive, if “subdued,” outlook.
The United Nations financial agency reported that British economic activity had seen a significant slowdown compared to last year and that inflation, currently at 10.1%, remains “stubbornly high.” The U.K. economy continues to think the impact of Russia’s full-scale invasion of Ukraine and lingering supply scarring from the Covid-19 pandemic.
On Tuesday, British Finance Minister Jeremy Hunt said that “the job is not done” on tackling inflation and which improves Britain’s growth prospects. He highlighted that high inflation and increased energy costs were challenges for the U.K. and internationally.
“We’re working every day to increase our economy and deliver on this and the other administration priorities, and the IMF says we are doing just that,” Hunt stated at an IMF press conference.
In its report, the IMF stated that the U.K. had weathered the recent global banking stresses well, alluding to the latest collapse of Credit Suisse and turmoil in the sector in the U.S.
The agency report stated that the U.K. continued financial stability as a “global public good” and stated evidence-based reform for London that addresses the post-pandemic increase in labor inactivity, regulation uncertainty around firm investment, and accelerating the country’s green transition.
The Tuesday note provided a more positive development for the U.K. than the agency’s World Economic Outlook of April.
The previous month’s forecast suggests that U.K. growth would shrink by 0.3% in 2023, which makes it the worst performer in the G20 group. The latest release means U.K. growth will reach 0.4% this year, a 0.7 percentage point upgrade from the previous projection.