On Monday evening, the International Monetary Fund (IMF) expressed a bleaker outlook for the UK economy than anticipated—its new prediction sees only 0.6% growth in 2023 as opposed to its previous estimate of 0.9%. The grim news is that this figure puts Britain behind Russia’s alleged economic decline of 0.3%, making it, unfortunately, the sole “advanced economy” expected to contract over this timeframe!
According to the IMF, There Are Many Reasons Behind the UK’s Downsizing
According to Pierre-Olivier Gourinchas, IMF Head of Research, the UK‘s current economic decline is due to three main factors: skyrocketing prices for natural gas being passed onto consumers; an employment rate that has yet to rebound from pre-pandemic levels despite a tight labor market leading to reduced production; and harsh monetary tightening policies. In brighter news, however, the group did revise its 2024 outlook for the nation upwards from 0.6% growth in expansion all the way up to 0.9%.
Data suggests that the UK‘s GDP has decreased by 0.3% in the third quarter, with subsequent fourth-quarter outcomes expected to echo this downtrend when released on February 10th. Goldman Sachs and KPMG have each raised alarms surrounding consumers’ disposable income levels as well as a potential downturn of the job market across 2021.
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One Of The Reasons For This Pessimistic Mood In The UK Is Politics
The UK is facing many high long-term illness rates and declining trade due to Brexit. Since the IMF last produced a forecast, Liz Truss’ budget has been introduced – intended to spur economic growth but ultimately caused an economic decline after disrupting financial markets.
In November, the Bank of England predicted that the UK‘s Gross Domestic Product (GDP) would drop by 1.5% in 2023. However, it recently claimed its forecast had likely improved due to updated inflation figures and immediate fiscal support plans. To confirm this projection or make any necessary revisions, the Bank is expected to report on Thursday with its monetary policy announcement.
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