He International Monetary Fund He said on Tuesday he no longer expected a recession in Britain this year, praising steps being taken by the government to stabilize the economy and fight inflation as well as warnings against tax cuts ahead of the election.
According to the IMF, Gross Domestic Product will grow by 0.4% in 2023 instead of shrinking by 0.3% as predicted in April. The previous forecast was the weakest for any major economy this year, but the new one is missing great Britain ahead of rich world peers like Germany.
Although the IMF warned that the outlook remained weak, it said Prime Minister Rishi Sunak’s government was on the right track, in contrast to his worries about the direction of economic policy under his predecessor, Liz Truss.
“The British authorities have taken decisive and responsible steps in recent months,” IMF Managing Director Kristalina Georgieva told a news conference on Tuesday. “What we’re seeing is that the government is prioritizing, and rightly so, the fight against inflation.”
Sunak and Finance Minister Jeremy Hunt took office in October after Truss’ brief tenure wreaked havoc on financial markets.
The IMF said Britain’s improved outlook reflected “unanticipated demand”, helped in part by faster-than-usual wage growth, higher government spending and increased business confidence.
That reduction in energy costsafter last year’s strong gains, and supply chain standardization the world is also contributing to it.
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