UK economy set for weakest growth of G7 next year after downgrade – IMF

The UK is forecast to record the weakest economic growth across the G7 group of advanced economies next year, according to the International Monetary Fund (IMF).

It came as bosses at the finance body said the global economy is “limping along” amid pressure from persistent inflation and higher borrowing costs in its latest economic outlook.

The IMF, in a new assessment of the UK economy, marginally upgraded its growth prediction for UK gross domestic product (GDP) this year to 0.5%, from 0.4%.

It would be second weakest performance across the G7, behind Germany, according to the United Nations’ financial agency.

The IMF however downgraded its forecasts for the UK’s economic growth next year.

It had previously pointed towards 1% growth for 2024 but on Tuesday reduced this prediction to 0.6% amid pressure from higher interest rates.

This would represent the worst growth rate across all of the G7, while Canada is expected to have the strongest growth, at 1.6%.

GDP

Global GDP is expected to rise by 3% this year and 2.9% next year, according to the latest forecast.

The prediction for 2023 was held the same against the organisation’s previous prediction in July, while its forecast for 2024 saw a 0.1 percentage point decline.

IMF director of research, Pierre-Olivier Gourinchas, said: “The global economy continues to recover from the pandemic, Russia’s invasion of Ukraine and the cost-of-living crisis. In retrospect, the resilience has been remarkable.

“Despite war-disrupted energy and food markets and unprecedented monetary tightening to combat decades-high inflation, economic activity has slowed but not stalled.

“Even so, growth remains slow and uneven, with widening divergences. The global economy is limping along, not sprinting.”

The IMF also predicted that the UK would see consumer price index (CPI) inflation 7.7% for the current year, with this set to slow more sharply to 3.7% next year.