Britain Will Avoid Falling Into Recession This Year, Says IMF

The International Monetary Fund has upgraded its forecasts for UK growth, saying the country will no longer fall into recession this year, but warned the government against tax cuts it said would fuel inflation and result in a long period of high-interest rates.

- Phillip Inman

In a message to the chancellor, Jeremy Hunt, that he should maintain his planned squeeze on public spending, the Washington-based body said tax policy should stay “aligned with monetary policy in the fight against inflation”.

Any financial surpluses should be used to pay down government debt to “rebuild fiscal buffers”, it said in its annual Article IV review of the UK’s economic outlook released yesterday. Giving a more upbeat assessment of the UK’s growth, the IMF forecast the country’s gross domestic product would grow by 0.4% this year, tearing up its estimate in April of a 0.3% contraction.

The economy is still expected to grow at the same modest pace of 1% in 2024, before rising to 2% in 2025 and 2026.