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The International Monetary Fund (IMF) has cut its growth forecast for the UK in 2023, with the economy expected to slow to 0.3% for the year.
This is down from previous growth predictions of 0.5%, and follows a 3.8% drop in growth from 7.4% in 2021 to expectations of 3.6% for 2022.
The IMF said global economic activity is experiencing a broad-based and sharper-than-expected slowdown, with inflation higher than seen in several decades.
Overall, global growth is forecast to slow from 6% in 2021 to 3.2% in 2022 and 2.7% in 2023. According to the IMF, this is the weakest growth profile since 2001, except for the global financial crisis and the acute phase of the Covid-19 pandemic.
It added that the worst is yet to come and that 2023 will feel like a recession for many people. This is due to the cost-of-living crisis, tightening financial conditions in most regions, Russia’s invasion of Ukraine, and the lingering Covid-19 pandemic weighing on the outlook.
Additionally, global inflation is forecast to rise from 4.7% in 2021 to 8.8% in 2022, but is expected to decline to 6.5% in 2023 and to 4.1% by 2024.
The IMF said: “Monetary policy should stay the course to restore price stability, and fiscal policy should aim to alleviate the cost-of-living pressures while maintaining a sufficiently tight stance aligned with monetary policy.
“Structural reforms can further support the fight against inflation by improving productivity and easing supply constraints, while multilateral cooperation is necessary for fast-tracking the green energy transition and preventing fragmentation.”
