The UK will escape a recession this year, the IMF said on Tuesday, adding that the country’s economy had been “buoyed by resilient demand in the context of declining energy prices”.
The Washington-based thinktank now expects UK GDP to grow 0.4% per cent in 2023, reflecting stronger wage growth, more supportive fiscal policy and the easing of global energy prices and supply chain blockages.
The fund expects growth of 1% in 2024 and to average 2% in 2025 and 2026.
In January, the IMF predicted in January that the UK economy would shrink by 0.5% between the final quarter of 2022 and the last quarter of this year.
Despite the increase the fund cautioned that Britain risked being stuck with persistent inflation unless interest rates stayed high.
“Economic activity has slowed significantly from last year and inflation remains stubbornly high,” the fund said.
It added: “The outlook for growth, while improving somewhat in recent months, remains subdued.”
Chancellor Jeremy Hunt said: “Today's IMF report shows a big upgrade to the UK's growth forecast and credits our action to restore stability and tame inflation.”