IMF warns UK economy set to shrink in 2023

01 Feb 2023

The International Monetary Fund (IMF) has warned that the UK economy is set to contract worse than any other advanced economy in 2023.

It revised its previous predictions of economic growth and stated that the UK economy will shrink by 0.6% this year.

The IMF criticised those countries that 'responded to the cost-of-living crisis by supporting people and businesses with broad and untargeted policies that helped cushion the shock', and said that such policies 'have proved costly and increasingly unsustainable'.

It recommended that governments adopt targeted measures that 'conserve fiscal space'.

Commenting on the IMF's warning, Paul Johnson, Director of the Institute for Fiscal Studies (IFS), said: 'My best guess is that the economy will be broadly stagnant this year. That we're not going to get much in the way of growth but we're not going to have a deep recession either.

'Now that's not great, particularly as we should be bouncing back more strongly from Covid and particularly as we've not been growing terribly well for the last decade and more.'