According to the International Monetary Fund (IMF) the UK is forecast to be hit “with the lowest growth in the G7.”
UK interest rates are expected to remain higher for a “little while longer” into 2024 amid consistent inflation, the IMF said.
The IMF said that the World economy is “limping along and not sprinting” due to higher borrowing costs in the finance body latest economic outlook.
The IMF have upgraded their growth prediction for UK gross domestic product (GDP) for 2023 to 0.5%, from 0.4%.
According to the United Nations’ financial agency, the UK is the second weakest performing country across the G7 behind Germany.
In their report, the IMF said, “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.”
Chancellor of the Exchequer Jeremy Hunt said, “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 research Pierre-Olivier Gourinchas said, “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.”
Gourinchas added, “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.”
Shadow chief secretary to the Treasury Darren Jones said: “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.”