IMF says it expects no more recession in UK this year

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The UK will escape a recession this year, the IMF said on Tuesday, adding that the country’s economy was “supported by resilient demand amid falling energy prices”.

But the fund warned that Britain was in danger of being stuck with lingering inflation unless interest rates stay high for longer.

“Economic activity has slowed significantly since last year and inflation remains stubbornly high,” the fund said, adding that “growth prospects, while improving slightly in recent months, remain subdued.”

THE IMF predicted earlier this year that the UK economy would shrink by 0.5% between the last quarter of 2022 and the last quarter of this year.

But, in a significant update, he said the economy is now expected to expand by 0.4% in 2023, reflecting stronger wage growth, more accommodating fiscal policy and a faster easing of global energy price pressures and of the blocks in the supply chain.

It expects gross domestic product to grow by 1% in 2024 and by an average of 2% in 2025 and 2026.

But the IMF has warned that inflation is now set to stay above Bank of EnglandThe target of 2% for six months more than expected last month, until mid-2025.

“More monetary tightening will probably be needed, and rates may need to stay higher for longer,” he said.

The fund warned against “premature celebrations,” with the risk that high energy prices will be replaced by more persistent price and wage pressures that could drive inflation to “plateau” at a high rate.