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IMF predicts UK economy will shrink by 0.3% in 2023

Samantha Partington
Written By:
Samantha Partington

The UK is forecast to be one of the worst performing advanced economies this year, according to a report from the International Monetary Fund (IMF).


The IMF predicts the UK economy will shrink by 0.3% in 2023 and grow by 1% in 2024. Germany’s economy was also forecast to contract by 0.1% this year.

In its report, the IMF said: “On the surface, the global economy appears poised for a gradual recovery from the powerful blows of the pandemic and of Russia’s unprovoked war on Ukraine.”

It added: “The massive and synchronous tightening of monetary policy by most central banks should start to bear fruit, with inflation moving back toward its targets.”

The fund forecasts that global growth will bottom out at 2.8% this year before rising modestly to 3% next year.

Global inflation will decrease, it said, although this will be more slowly than first thought, from 8.7% in 2022 to 7% this year and 4.9% in 2024.

However, while emerging markets and developing economies were described as “powering ahead” with growth rates, the slowdown is concentrated in advanced euro economies and the UK.

The IMF’s prediction does signal an improvement from its previous forecast of a 0.6% contraction.

Responding to the report, Chancellor Jeremy Hunt said: “Thanks to the steps we have taken, the Office of Budget Responsibility says the UK will avoid recession, and our IMF growth forecasts have been upgraded by more than any other G7 country.

“The IMF now say we are on the right track for economic growth. By sticking to the plan we will more than halve inflation this year, easing the pressure on everyone.”