The UK was the only G7 country to downgrade its growth forecast for 2023 in the IMF‘s forecast released on Tuesday, adding to pressure on Chancellor Hunt to present a growth plan.
The IMF expects the UK economy to shrink by 0.6% this year, a sharp drop from its previous forecast of growth of 0.3%. The IMF said Britain would be affected by a range of factors, including tax increases announced by its chancellor Hunt late last year as he tried to restore investor confidence after the turmoil over former prime minister Truss’ “mini-budget”.
In addition, the IMF said Britain was hit particularly hard by a surge in gas prices in the wake of the Russia-Ukraine conflict, as it relies on gas for much of its electricity generation and faces a shortage of workers, which is holding back the economy.
The IMF’s chief economist, Pierre-Olivier Gourinchas, said all these factors combined would result in a sizeable contraction in economic activity in the UK in 2023.
