UK on track to stave off recession, says more favorable IMF growth forecast – POLITICO

LONDON — The United Kingdom will avoid a recession this year, the International Monetary Fund has said, in a boost for Chancellor Jeremy Hunt after earlier gloomy predictions from the global financial body.

The IMF – which said at the start of the year it expected Britain’s economy to fare worse than Russia in 2023 – raised its outlook for the UK on Tuesday. He now expects the UK economy to grow by 0.4% in 2023, an improvement from the 0.3% contraction he forecast in April.

However, the fund warned that inflation remains high – and its leveling remains modest.

“Growth prospects, although improving somewhat in recent months, remain weak,” the IMF said.

The latest figures were welcomed by Hunt, who said the IMF report “credits our action to restore stability and bring inflation under control”.

Speaking at a press conference, IMF Managing Director Kristalina Georgieva said there remained ‘significant risks’ to the agency’s outlook – although she praised the Bank of England and Hunt, who were brought into the UK government to stabilize the market chaos left by his predecessor.

“What we have in this difficult environment is very responsible action by the Bank of England, monetary policy tightening and spring and autumn budgets that align fiscal policy with policy objectives. inflation-fighting monetary policy,” Georgieva said.

The IMF has also welcomed the UK government’s Windsor Framework Agreement on the Northern Ireland Protocol, which was reached earlier this year after months of negotiations over post-Brexit trade rules.

The fund also expressed hope that UK business and growth could benefit from a UK return to the EU’s Horizon research programme, which Britain left when it left the EU. in 2020. Talks are ongoing between London and Brussels on the program.