The International Monetary Fund stated on Monday that it no longer anticipates that the British economy will enter a recession this year. However, it warned that the prognosis remained dim.
According to the IMF, the UK's GDP would likely increase by 0.4% in 2023. The poorest projection of any major economy was a decrease of 0.3% in April, according to this forecast.
According to the Fund, the improved prognosis was caused, in part, by faster-than-average pay growth, more government investment, and increased corporate confidence.
Energy prices' decline and the normalisation of the world's supply systems also contributed.
"The outlook for growth, while improving somewhat in recent months, remains subdued," the IMF said.
"Economic activity has slowed significantly from last year and inflation remains stubbornly high following the severe terms-of-trade shock due to Russia's war in Ukraine and, to some extent, labour supply scarring from the pandemic," it added.
British inflation is anticipated to drop from more than 10% in March to around 5% by the end of this year and could reach its objective of 2% by the middle of 2025, substantially in line with predictions made by the Bank of England earlier this month.
The IMF predicted that the economy would likely expand by 1% in 2024 and 2% in the following two years before returning to a long-run growth rate of roughly 1.5%.
The IMF stated that by taking steps to address the effects of long-term illness on the labour force and decreasing policy and regulatory uncertainty that hurt company investment, Britain's growth potential might be increased.
Business investment should be encouraged by a recently updated deal with the European Union on commerce involving Northern Ireland after Brexit and a "more measured" approach to repealing EU law, it said.
The IMF stated that the largest near-term concerns to Britain's economic outlook were increased persistence in inflation and the ensuing unsustainable wage rises, and that the BoE should make sure monetary policy remained tight.
"This said, elevated uncertainty about the macroeconomic outlook and inflation persistence merits continuous review of the pace and magnitude of monetary tightening," the IMF added.
The BoE increased borrowing prices 12 times in a row, bringing them to 4.5% this month. According to the financial markets, rates will top at 5% later this year.
(Source:www.theguardian.com)
According to the IMF, the UK's GDP would likely increase by 0.4% in 2023. The poorest projection of any major economy was a decrease of 0.3% in April, according to this forecast.
According to the Fund, the improved prognosis was caused, in part, by faster-than-average pay growth, more government investment, and increased corporate confidence.
Energy prices' decline and the normalisation of the world's supply systems also contributed.
"The outlook for growth, while improving somewhat in recent months, remains subdued," the IMF said.
"Economic activity has slowed significantly from last year and inflation remains stubbornly high following the severe terms-of-trade shock due to Russia's war in Ukraine and, to some extent, labour supply scarring from the pandemic," it added.
British inflation is anticipated to drop from more than 10% in March to around 5% by the end of this year and could reach its objective of 2% by the middle of 2025, substantially in line with predictions made by the Bank of England earlier this month.
The IMF predicted that the economy would likely expand by 1% in 2024 and 2% in the following two years before returning to a long-run growth rate of roughly 1.5%.
The IMF stated that by taking steps to address the effects of long-term illness on the labour force and decreasing policy and regulatory uncertainty that hurt company investment, Britain's growth potential might be increased.
Business investment should be encouraged by a recently updated deal with the European Union on commerce involving Northern Ireland after Brexit and a "more measured" approach to repealing EU law, it said.
The IMF stated that the largest near-term concerns to Britain's economic outlook were increased persistence in inflation and the ensuing unsustainable wage rises, and that the BoE should make sure monetary policy remained tight.
"This said, elevated uncertainty about the macroeconomic outlook and inflation persistence merits continuous review of the pace and magnitude of monetary tightening," the IMF added.
The BoE increased borrowing prices 12 times in a row, bringing them to 4.5% this month. According to the financial markets, rates will top at 5% later this year.
(Source:www.theguardian.com)