It got here as bosses on the finance physique mentioned the worldwide financial system is “limping along” amid strain from persistent inflation and better borrowing prices in its newest financial outlook.
The IMF, in a brand new evaluation of the UK financial system, marginally upgraded its progress prediction for UK gross home product (GDP) this yr to 0.5%, from 0.4%.
It can be second weakest efficiency throughout the G7, behind Germany, in line with the United Nations’ monetary company.
The IMF nevertheless downgraded its forecasts for the UK’s financial progress subsequent yr.
It had beforehand pointed in the direction of 1% progress for 2024 however on Tuesday lowered this prediction to 0.6% amid strain from greater rates of interest.
This would signify the worst progress fee throughout the entire G7, whereas Canada is anticipated to have the strongest progress, at 1.6%.
In its report, the IMF mentioned: “The decline in (UK) growth reflects tighter monetary policies to curb still-high inflation and lingering impacts of the terms-of-trade shock from high energy prices.”
The Bank of England’s base rate of interest presently sits at 5.25% after policymakers held the extent final month.
Chancellor of the Exchequer Jeremy Hunt mentioned: “The IMF have upgraded growth for this year and downgraded it for next – but longer term they say our growth will be higher than France, Germany or Italy.
“To get there we need to deal with inflation and do more to unlock growth – which I will be focusing on in the upcoming Autumn Statement.”
IMF director of analysis Pierre-Olivier Gourinchas mentioned: “The general perspective on the UK is that we have relatively subdued growth, we have falling momentum and we have a labour market which is cooling but inflation remains quite persistent.
“That is going to require monetary policy to remain tight for a little while longer into next year.”
Global GDP is anticipated to rise by 3% this yr and a couple of.9% subsequent yr, in line with the newest forecast.
The prediction for 2023 was held the identical in opposition to the organisation’s earlier prediction in July, whereas its forecast for 2024 noticed a 0.1 proportion level decline.
Mr Gourinchas mentioned: “The global economy continues to recover from the pandemic, Russia’s invasion of Ukraine and the cost-of-living crisis. In retrospect, the resilience has been remarkable.
“Despite war-disrupted energy and food markets and unprecedented monetary tightening to combat decades-high inflation, economic activity has slowed but not stalled.
“Even so, growth remains slow and uneven, with widening divergences. The global economy is limping along, not sprinting.”
The IMF additionally predicted that the UK will see shopper worth index (CPI) inflation of seven.7% for the present yr, with this set to gradual extra sharply to three.7% subsequent yr.
Shadow chief secretary to the Treasury Darren Jones mentioned: “Britain is still paying the price for the Conservatives’ disastrous mismanagement of the economy that is forecast to leave us with the lowest growth in the G7 and working people worse off.”
