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The International Monetary Fund (IMF) has said Britain will be the only large, rich economy to shrink this year, amid warnings that it will put pressure on Rishi Sunak and Jeremy Hunt.
The prime minister has rejected calls to abandon his economic strategy and push for short-term growth, arguing that curbing inflation must continue to take precedence over tax cuts.
In its latest World Economic Outlook released on Tuesday, the IMF cut its forecast for UK GDP growth in 2023 to -0.6% from -0.3%. All other G7 countries are expected to post positive growth this year.
The fund said the recession was caused by high inflation weighing on consumer confidence, and rising interest rates reduced demand.
Conservative MPs blamed the prime minister for the disappointing figures, blaming the prime minister’s decision to raise taxes as a drag on growth.
Former Tory leader Sir Yin Duncan Smith said Me: “I’ve said before that we need growth or we’re going to be more indebted. Targeted tax cuts can help achieve that. Our economy is shrinking.” No wonder we have one of the toughest fiscal tightening policies.
Mr Hunt said in a statement:
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“Short-term challenges must not overshadow the long-term prospects. The UK beat many expectations last year. is projected to grow faster than Germany and Japan in 2020.”
Treasury sources have argued that inflation is the main cause of the recession and have warned that growth will not pick up until the pace of inflation is halved.The prime minister will address the 1922 Conservative Parliamentary Committee this week It is planned, where he will be faced with questions about his strategy.
Labour’s shadow prime minister, Rachel Reeves, said:
“Governments should do all they can to make our economy stronger and grow. It’s the only way.”
The IMF forecasts that the US economy will grow 1.4% this year, while France, Germany and Italy will all grow between 0.1% and 0.6%. Her 2024 GDP growth forecast for the UK has been raised to 0.9% from 0.6%.