Post on 03 February 2023

Is the IMF right about the UK economy?

The IMF consigned Britain to the economic doghouse on Tuesday.
As the only leading economy likely to contract this year, the UK’s growth forecasts were revised down by the fund at the same time as it boosted those of most other countries. Even Russia is expected to grow more than the UK in 2023, in the fund’s outlook. Britain’s politicians agree that the country has a problem. Jeremy Hunt, the chancellor, has blamed “uneven and lower growth” on poor productivity, skills gaps, low business investment and regional disparities in wealth. Rachel Reeves, his counterpart in the Labour party, simply blamed “13 years of Tory failure” in the House of Commons.
Is the IMF right about Britain’s economy? The fund’s forecasts will never be entirely correct about the global economy or any one country.
They are best thought of as a continuous process of updating expectations in line with the most recent economic developments. The forecast for the UK reflects the country’s disastrous autumn of Trussonomics, which came too late for the IMF’s October forecasts, so it is not surprising the fund has taken a dimmer view of Britain’s prospects. Despite the downgrade, Pierre-Olivier Gourinchas, the fund’s chief economist, said the government’s economic policy was now “on the right track”.

Source : The Financial Times

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