UK economy the only one in G7 expected to shrink
The UK is expected to be the only major economy to shrink in 2023. That’s according to the International Monetary Fund (IMF), which released data in its latest health check. The IMF said that the UK economy will contract by 0.6% and, as the BBC explained:
The UK is expected be the only country to shrink next year across all the advanced and emerging economies. Even sanctions-hit Russia is now forecast to grow this year.
If a country’s economy shrinks, typically this means companies make less money and the number of people unemployed rises.
The IMF said that while the prospects for every other member of the G7 group of leading developed nations had improved or remained unchanged since October, rising interest rates and higher taxes had made the outlook for the UK gloomier.
Reaction to IMF projections
Commentators reacted to the stark outlook from the IMF. Sky News‘s Ed Conway called the data “grisly”:
Truly grisly assessment for the UK economy from the IMF this morning.
– UK to fare worse than any other major economy this year
– worse even than Russia(!)
– Britain's downgrade came as most other countries saw their growth prospects upgraded
Full story:https://t.co/ATahkwWnqr pic.twitter.com/cRYaO5aa4P
— Ed Conway (@EdConwaySky) January 31, 2023
Byline Times political editor Adam Bienkov reminded us of the spectre of Brexit:
Jeremy Hunt said last week said the UK's growth plan had been "energised" by Brexit.
Here's the IMF's latest growth forecast. pic.twitter.com/Qw7st05Dnz
— Adam Bienkov (@AdamBienkov) January 31, 2023
AJ+ noted that it’s been three years since Brexit, and things still look bleak:
Today is 3 years since Brexit.
Since leaving the EU:
▪️ UK families pay an avg. $258/year more for food due to cost of imports
▪️ UK is losing $124B/year from cuts to investment and workers, per Bloomberg
The IMF says it is the only advanced economy likely to shrink in 2023. pic.twitter.com/O2wy62aJtp
— AJ+ (@ajplus) January 31, 2023
Typically, the response from the Tories was defensive bluster. Chancellor Jeremy Hunt insisted that the IMF’s forecast didn’t necessarily mean the UK economy would continue to under-perform:
Short-term challenges should not obscure our long-term prospects – the UK outperformed many forecasts last year, and if we stick to our plan to halve inflation, the UK is still predicted to grow faster than Germany and Japan over the coming years.
Even the Guardian live-blog’s response to Hunt’s reaction was scathing:
The IMF’s message, though, is that the UK is an exception to the brightening global prospects this year.
Shadow chancellor Rachel Reeves said:
The UK is the only major economy forecast to shrink this year.
Weaker growth compared to our competitors for both of the next two years.
The World upgraded. The UK downgraded.
Meanwhile, economic justice campaigner Richard Murphy had much to say on the subject. He argued that the looming recession was a choice from the UK government:
The UK is going to be in recession, by choice https://t.co/UmqOPrmDIw The IMF thinks the UK will be the only major economy in recession in 2023. That’s not surprising. We have a recession precisely because our government has chosen to have one.
— Richard Murphy (@RichardJMurphy) January 31, 2023
Murphy argued that there a number of reasons why the UK is facing recession this year, including that energy price hikes favour companies instead of people:
The policy of believing monopolies should be allowed to price as if they are competitive enterprises (albeit, ones not ultimately allowed to fail) is the recession we have got. The government engineered this failure.
Murphy also set out how the government’s approach to striking workers is left wanting:
the government is imposing pay austerity to break public sector workers and destroy public services.
The Tories have resisted strike action wherever they can. It should be a scandal that the UK is the only country in the G7 whose economy is projected to shrink. However, it’s business as usual for a government that chooses big business over people every time.
Featured image by Unsplash/John McArthur
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