UK economic growth will be worse than previously thought, says the IMF

30 January 2024 , 14:30

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The UK economy is set for slower growth than previously thought (Image: PA Wire/PA Images)

The UK economy is set for slower growth than earlier predicted, according to a new IMF report.

Ranked amongst the poorest G7 performers, the UK is anticipated to see only 0.6% growth this year and 1.6% next. This would put us at the second worst performing in the G7 this year, and joint third in 2025.

The IMF has kept its forecast the same as its October report for this year, but next year's prediction has been lowered by 0.4%. However, the IMF affirms this change stems from revised data, not a worsening economic climate.

As per updated figures, the Office for National Statistics (ONS) stated that from 2019 to end of 2021, the economy grew by 0.6%. The IMF said: "The markdown to growth in 2025 of 0.4 percentage point reflects reduced scope for growth to catch up in light of recent upward statistical revisions to the level of output through the pandemic period."

But it adds we can expect a minor uptick in growth this year as high energy price effects lessen. As inflation drops next year, people's real incomes will get a chance to recover, resulting in our economy gradually picking up speed.

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The global economy is predicted to grow by 3.1% this year and 3.2% next year, according to the International Monetary Fund (IMF). This is lower than the 3.8% average between 2000 and 2019, but it's 0.2 percentage points higher than the IMF's previous forecast in October.

The IMF attributes this upgrade to the US economy being more robust than anticipated and China's government introducing fiscal support. However, the IMF has warned that ongoing attacks in the Red Sea could cause further shocks to the global economy.

"Container shipping costs have already sharply increased, and the situation in the Middle East remains volatile," the IMF stated. It also cautioned that "Further geoeconomic fragmentation could also constrain the cross-border flow of commodities, causing additional price volatility."

Lawrence Matheson