The government’s “botched Brexit deal” has been blamed for Britain’s paltry economic performance as new IMF figures put the UK on track to be the worst-performing G7 economy this year.
UK output is expected to contract by 0.3 per cent this year before rebounding to grow by 1 per cent next year, economists working for the body said.
It puts the UK firmly at the bottom in the G7 group of advanced economies this year. The only other economy that the IMF expects to decline is Germany’s, which is expected to contract by 0.1 per cent.
IMF forecasts
But it is at least better news than a previous IMF forecast, which predicted that the economy would shrink by 0.6 per cent this year.
The group singled out the UK and parts of Europe as the places which will struggle over the coming years.
“Notably, emerging market and developing economies are already powering ahead in many cases, with growth rates (fourth quarter over fourth quarter) jumping from 2.8 per cent in 2022 to 4.5 per cent this year,” it said.
“The slowdown is concentrated in advanced economies, especially the euro area and the United Kingdom.”
Next year is more of a mixed bag for the UK. Output here is expected to rise by 1 per cent. It puts the UK towards the bottom of the G7 yet again, tied with Japan and slightly ahead of Italy, which is set to grow by 0.8 per cent.
Problems ahead
The economists also warned of further problems in the months ahead, even following the recent chaos in the banking sector which saw several US banks go out of business and Credit Suisse bought by rival UBS.
“Below the surface, however, turbulence is building, and the situation is quite fragile, as the recent bout of banking instability reminded us,” the IMF said.
“Inflation is much stickier than anticipated even a few months ago. While global inflation has declined, that reflects mostly the sharp reversal in energy and food prices.
“But core inflation, excluding the volatile energy and food components, has not yet peaked in many countries.”
In the UK inflation is expected to fall from 9.1 per cent last year to 6.8 per cent this year and 3 per cent in 2024.
Brexit
Commenting on the projected economic performance, Layla Moran, Lib Dem MP and member of the UK Trade and Business Commission said:
“This isn’t rocket science. The UK is the only developed economy with the added pressures of Brexit where businesses face extra costs, mountains of new red tape and amplified labour shortages.
“Our economy will continue to underperform until this incompetent Conservative government owns up to and fixes the issues caused by their botched Brexit deal.”
Related: New analysis shows projected 0.08% from UK-Asia trade deal could be an overestimate