The office of British Prime Minister Rishi Sunak was obliged to defend the nation’s economic performance on Tuesday in the wake of a gloomy IMF prediction that the UK is expected to perform worse than any other major nation.
The International Monetary Fund (IMF) revised its estimate for the UK’s gross domestic product (GDP) contraction in 2023 from 0.7% to 0.6% in the most recent update of its economic predictions.
Despite the IMF’s forecast that the British economy will reverse this year, Downing Street reaffirmed that the UK’s economy is robust.
“The IMF itself said that UK economic policy is now on the right track,” Sunak’s official spokesperson told reporters.
The spokesperson added that the UK outperformed many forecasts last year and was “predicted to grow faster than Germany and Japan over the coming years”.
The Opposition Labour Party raised an urgent question in the House of Commons on the IMF forecast and blamed it on 13 years of a Conservative Party led government’s “failure”.
“Today’s IMF assessment holds a mirror up to the wasted opportunities and it is not a pretty sight,” said Rachel Reeves, the shadow chancellor.
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“The UK is the only major economy forecast to shrink this year. Weaker growth compared to our competitors for both of the next two years. The world upgraded, Britain downgraded. Growth even worse than sanctions-hit Russia,” said Reeves.
IMF said in its latest analysis that while the broader global economy was doing better than expected, with inflation having peaked and investment beginning to turn around, the UK economy would face a downgrade “reflecting tighter fiscal and monetary policies and financial conditions and still-high energy retail prices weighing on household budgets”.
UK Chancellor Jeremy Hunt said of the forecast: “The governor of the Bank of England recently said that any UK recession this year is likely to be shallower than previously predicted, however these figures confirm we are not immune to the pressures hitting nearly all advanced economies.
“Short-term challenges should not obscure our long-term prospects – the UK outperformed many forecasts last year, and if we stick to our plan to halve inflation, the UK is still predicted to grow faster than Germany and Japan over the coming years.”
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