The UK will be the only G7 member whose economy will shrink this year, with a contraction of 0.6%, the IMF said. The Washington-based institution downgraded its outlook by a massive 0.9 percentage point from October, saying higher interest rates and taxes along with government spending restraint will exacerbate a cost-of-living crisis.
In 2024, the economy will rebound only slowly, growing at 0.9% – matching Japan and Italy at the bottom of the G7 league table for growth. The downgrade to UK growth is striking because the IMF’s October forecast was prepared before the £45-billion unfunded tax giveaway in the September budget during the short-lived Liz Truss premiership. At the time, the fund said the fiscal splurge would have boosted growth.
IMF chief economist Pierre-Olivier Gourinchas repeated the warning. In a blog post alongside the forecast, he said many countries are being too generous with their energy support, which is “costly and increasingly unsustainable”.
IMF predictions are notoriously inaccurate.
When it comes to stirring in other countries' business the Brits are first in. Now they're paying the price.
Lockdowns will do that