The UK is expected to be the only major power to see its economy contract this year, outperforming Russia.<\/p>\n\n\n\n
According to the International Monetary Fund, the United Kingdom is the only G7 country in such dire financial straits (IMF).<\/p>\n\n\n\n
It has predicted that the UK’s GDP will contract by 0.6% in comparison to the 0.3% growth predicted in October.<\/p>\n\n\n\n
The IMF’s chief economist, Pierre-Olivier Gourinchas, explained that three primary factors are driving the UK’s economic outlook.<\/p>\n\n\n\n
‘First, there is exposure to natural gas… we’ve seen a very sharp increase in energy prices in the UK,’ he said. Natural gas provides a greater share of energy, with a higher pass-through to consumers.<\/p>\n\n\n\n
‘Employment in the UK has also not recovered to pre-pandemic levels. This is a situation in which there is a very tight labour market but an economy that has not re-absorbed as many people as it did previously. That means there will be less output and production.<\/p>\n\n\n\n
‘The third point is that there is a very sharp monetary tightening because inflation has been very high, as a result of the high pass-through of energy prices.’<\/p>\n\n\n\n
Chancellor Jeremy Hunt is now under increasing pressure to find a solution to the UK’s spiralling economic downturn.<\/p>\n\n\n\n
The IMF’s pessimistic outlook for the year ahead places the UK far behind its G7 counterparts and makes it the only country – across advanced and emerging economies – expected to experience a year of declining GDP.<\/p>\n\n\n\n
Among the other G7 countries, the IMF predicts 1.4% growth in the US, 0.1% in Germany, 0.7% in France, 0.6% in Italy, 1.8% in Japan, and 1.5% in Canada by 2023.<\/p>\n\n\n\n
It comes against a backdrop of public sector pay strikes and predictions that the UK will enter a recession, with inflation remaining above 10%.<\/p>\n\n","protected":false},"excerpt":{"rendered":"
The UK is expected to be the only major power to see its economy contract this year, outperforming Russia. According to the International Monetary Fund, the United Kingdom is the … <\/p>\n