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The International Monetary Fund (IMF) has warned that despite the government’s optimism, Britain’s economy is still growing the slowest among major economies.
The UK economy is expected to contract by 0.3% this year and grow by just 1% in 2024, according to the Fund’s latest edition of its World Economic Outlook.
Germany is the only other member of the G7, and even Russia is projected to see economic growth, with its GDP on a downward trend.
The UK’s poor performance this year has resulted in a rapid rise in interest rates needed to control inflation and a shift to natural gas for heating and power that has made the UK more vulnerable to rising global costs of fossil fuels. This is due to the country’s high degree of dependence.
Growth next year is projected to be below the HNWI average of 1.4%, making Italy the only major economy facing a slowdown in 2024.
The figure is a slight improvement from the previous edition of the World Economic Outlook in January, when the UK was expected to contract by 0.6% this year.
“We see the UK economy performing a little better,” said Pierre-Oliver Gourrinchas, chief economist at the IMF. But he added that the UK “seems to be doing a little worse than other comparable economies”, adding that it “has a high reliance on imported energy, a high share of gas, and historical gas prices.” ‘ said. 2012, it is the major negative terms of trade shock.
“The labor market is so tight that it has had to tighten monetary policy quite aggressively.
Prime Minister Jeremy Hunt said: The IMF says the economy is now on the right track for growth. Sticking to the plan will cut inflation by more than half this year, easing the pressure on everyone. ”
However, Labour’s Rachel Reeves replied:
“This is not just because 13 years of slow growth under the Tory has undermined our economy, but it is facing Tory mortgage penalties, the fastest since records began. That’s why families are getting worse as they see living standards declining at a rate.”
The IMF has warned that financial turmoil around the world has increased the risk of a further slowdown in the global economy. China is the only large economy expected to grow faster this year than last year after emerging from her tough Covid-19 restrictions.