Last month, it was predicted that the UK economy was going to contract by 0.3%; however, now the UK economy is growing by 0.4% this month. As a result of this, the IMF predicts that the UK economy won’t face a recession and that the UK will not have the weakest economic growth in the group of seven leading industrialised economies, even though the chancellor of the exchequer, Jeremy Hunt, stated that the UK would have to fall into recession in order to combat the cost of living crisis and inflation.
However, this all comes at a cost, and that is that interest rates have to remain high if they are to be brought down.
“The cause of this economic growth is that there have been falling energy prices, easing concerns over Brexit, and improving financial stability.”
The IMF’s managing director, Kristalina Georgieva
She also said that cutting taxes shouldn’t be done, as it’s neither affordable nor desirable.
The IMF also said that the faster-than-usual pay growth, along with global supply chains returning to normal post-pandemic, had also contributed to the growth.
However, with all this being said, the IMF predicts that inflation will reach the Bank of England’s target of 2% in mid-2025, which is later than it had been previously forecast.
Written by Mueez Lodhi
Produced by Madhav Bhimjiyani