The UK will be the worst performing G7 economy next year with a cost-of-living crisis and tax hikes expected to slow growth in economic activity, according to a new IMF forecast.
USA, Japan, Germany, France, Italy and Canada is expected to grow fasterby fund.
The new forecast undermines Prime Minister Boris Johnson’s recent claim that the UK is the fastest-growing G7 economy thanks to a successful vaccine program and recovery from the coronavirus pandemic.
In a speech to a Conservative party conference last month, Johnson said: “Thanks to that accelerated pace of deployment, we have the fastest growing economy in the G7.”
IMF predicts that the UK economy will grow by just 1.2% in 2023 and that its inflation will be higher than every other G7 member and slower to return to the 2% target.
Pierre-Olivier Gourinchas, chief economist at the IMF, said: “What we are seeing is that the UK is facing rising inflation, and tight monetary policy is weighing on economic activity. economy this year and next year”.
Economists have shown that the UK’s economic performance during the Covid-19 crisis was the average within the G7. This was masked by greater volatility after a relatively large contraction in 2020, followed by a faster recovery last year, with the IMF forecasting more hangovers in 2023 as taxes increase.
Julian Jessop, an independent economist, said fluctuations in UK performance from year to year depend on the duration of the Covid shutdowns, subsequent recoveries and exposure to the Russian invasion of Ukraine.
“Mid-term growth performance [of most G7 countries] is pretty much the same,” he said, adding that the UK growth projections for the mid-decade are towards the top of the G7, suggesting a reasonable outlook.
Weak growth next year as households deal with The cost of living is increasing and companies face an increase in the corporate tax rate from 19% to 25% next April that will make it difficult for Prime Minister Rishi Sunak to place the economy at the heart of any general election. send early.
Shadow chancellor Rachel Reeves said: “The IMF economic outlook shows the UK is forecast to experience the slowest growth in the G7 next year. Once again, the Conservatives’ economic strategy of low growth and high taxation is exposed.”
With growth slowing in 2023, the IMF forecasts the unemployment rate will rise to 4.6% after hitting a multi-decade low of 3.8% at the start of the year, according to the IMF. official data.
