“With growth recovering faster than expected, the UK economy is heading for a soft landing after a moderate technical recession in 2023,” the IMF said in a report.
UK GDP is now expected to grow by 0.7% in 2024 as a whole, versus an estimate of 0.5% in forecasts published in April.
According to official UK data published at the beginning of May, the country recorded GDP growth of 0.6% in the first three months of the year.
After peaking at more than 11% in late 2022, UK inflation “declined more rapidly than expected last year and is expected to return sustainably in early 2025” to the central bank’s 2% target in England, according to the report. to the International Monetary Fund.
The International Monetary Fund expects GDP to grow by 1.5% in 2025, as lower inflation favors more flexible purchasing power and financial conditions.
With only a few months to go before the national election, in which his party is expected to lose to the opposition Labor Party, Conservative Finance Minister Jeremy Hunt today welcomed a report that “clearly shows (…) that Britain’s economy has made significant progress”.
However, the IMF warned that “difficult choices will have to be made in the medium term to stabilize public debt, given the significant pressures on public services and critical investment needs.”
In particular, the Fund proposed increasing tax revenues, containing expenditures, and improving the efficiency of public services.
Hunt, who has cut social security contributions twice in recent months, promised tax cuts on Friday if the Conservatives remain in power in the next parliament.
Today, the International Monetary Fund has advised against any additional tax cuts unless they credibly boost growth and are adequately offset by prudent deficit-reduction measures.
The international organization advises “ambitious structural reforms”, while the UK’s long-term prospects remain penalized by “lower labor productivity and slightly higher than expected levels of inactivity due to long-term illness”.
British authorities must also “stay the course on climate policy”, according to the International Monetary Fund, which stresses that currently planned policies and spending will not be sufficient to achieve the country’s goals.
