February 13, 2023
According to the International Monetary Fund, as the cost of living continues to affect households, the UK economy will contract and perform worse than other major economies, including Russia.
Instead of expanding modestly as originally expected, the GDP would decrease by 0.6% in 2023, according to the IMF.
The IMF did add, though, that it believes the UK is currently “on the right track.”
The UK did better than many expectations last year, according to Chancellor Jeremy Hunt.
The UK is “lagging behind our counterparts,” according to the numbers, according to shadow chancellor Rachel Reeves.
The International Monetary Fund (IMF), which tries to stabilize economic development, stated that it has lowered its projection for the UK due to the country’s high energy costs, rising mortgage rates, higher taxes, and ongoing labor shortages. Brexit was not mentioned in the study as a reason the UK didn’t do as well as other countries. Three years have passed since the UK exited the EU.
Out of all the developed and developing economies, the UK is predicted to be the only one to contract this year. Now, even Russia, which is under sanctions, is expected to rise this year.
When a nation’s economy contracts, normally businesses make less money and the unemployment rate goes up.
According to IMF Chief Economist Pierre-Olivier Gourinchas, the UK’s 4.1% growth rate last year was “one of the strongest in Europe.”
According to data made public on Tuesday, the Eurozone’s economy grew by 3.5% in 2022, while the entire European Union’s economy increased by 3.6%.
The projection for the UK this year, according to Mr. Gourinchas, reflects the country’s “heavy dependence” on pricey liquefied natural gas, which has increased the cost of living.
He said that the UK was “definitely attempting to carefully navigate these multiple problems and we think that they are on the right road” based on the government’s intentions since it revealed its spending priorities in the Autumn Statement in November.
The IMF expects the UK to grow in 2024, revising up its forecast to 0.9% from 0.6%.
Source: BBC
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