IMF no longer expects recession in the UK; ups growth forecasts

The UK will avoid a recession this year, according to the IMF, which added that the country’s economy has been “buoyed by resilient demand in the context of declining energy prices.”

The Washington-based think tank now predicts UK GDP to expand 0.4% in 2023, owing to higher wage growth, more supportive fiscal policies, and a reduction in global energy costs and supply chain disruptions.

The fund anticipates 1% growth in 2024 and 2% growth on average in 2025 and 2026.

The IMF forecasted in January that the UK GDP will contract by 0.5% between the fourth quarter of 2022 and the fourth quarter of current year.

Despite the gain, the fund warned that Britain risks being trapped in a cycle of persistent inflation unless interest rates are raised.

“Economic activity has slowed significantly from last year and inflation remains stubbornly high,” the fund said.

It added: “The outlook for growth, while improving somewhat in recent months, remains subdued.”

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.”