London Daily

Focus on the big picture.
Tuesday, Sep 16, 2025

UK to be one of worst performing economies this year, predicts IMF

UK to be one of worst performing economies this year, predicts IMF

The UK is set to be one of the worst performing major economies in the world this year, according to the International Monetary Fund (IMF).

It says the UK economy's performance in 2023 will be the worst among the 20 biggest economies, known as the G20, which includes sanctions-hit Russia.

The IMF predicts the UK economy will shrink this year, although this is a small upgrade from its last forecast.

It also warned of a "rocky road" for the global financial system.

It follows the collapse of two US banks last month, closely followed by a rushed takeover of Swiss banking giant Credit Suisse by its rival UBS, which sparked fears of another financial crisis.

The IMF had already forecast that the UK would experience a downturn this year and be bottom of the pile of the G7 - a group of the world's seven largest so-called "advanced" economies, which dominate global trade and the international financial system. The UK topped the group in 2022 during the pandemic rebound.

It now expects the UK economy to shrink by 0.3% in 2023 and then grow by 1% next year.

Although the UK is forecast to have the worst economic performance this year, the IMF's latest prediction is slightly better than its previous expectation of a 0.6% contraction, made in January.

IMF researchers have previously pointed to Britain's exposure to high gas prices, rising interest rates and a sluggish trade performance as reasons for its weak economic performance.

Forecasts are made to give a guide to what is most likely to happen in the future, but they are not always right. For example, previous IMF forecasts picked up fewer than 10% of recessions a year ahead of time, according to an analysis it conducted of recessions around the world between 1992 and 2014.

Responding to the latest IMF's predictions, Chancellor Jeremy Hunt said: "Our IMF growth forecasts have been upgraded by more than any other G7 country.

"The IMF now say we are on the right track for economic growth. By sticking to the plan we will more than halve inflation this year, easing the pressure on everyone."

But Rachel Reeves, Labour's shadow chancellor, said the estimates showed "just how far we continue to lag behind on the global stage".

"This matters not just because 13 years of low growth under the Tories are weakening our economy, but because it's why families are worse off, facing a Tory mortgage penalty and seeing living standards falling at their fastest rate since records began," she added.

Liberal Democrat Treasury spokesperson Sarah Olney said the forecast was "another damning indictment of this Conservative government's record on the economy".

A number of forecasters think the chances of a recession in the UK this year are declining. An economy is usually said to be in recession if it shrinks for two consecutive three-month periods.

The independent Office for Budget Responsibility now expects the economy to contract by 0.2% this year but avoid a recession.

Bank of England governor Andrew Bailey also said recently that he was "much more hopeful" for the economy, and it was no longer heading into an immediate recession.


The new forecasts come against the backdrop of a world economy that continues to recover from both the pandemic and the Ukraine war energy shock.

But the IMF said there were concerns about the wider impact of recent fragility in global banking markets.

The IMF now expects global growth to fall from 3.4% in 2022 to 2.8% in 2023, before rising slowly and settling at 3% in five years' time.

But it warned that if there is more stress in the financial sector, global growth could weaken further this year.


Interest rates predicted to fall


Separately, the IMF said it expects real interest rates - which take into account inflation - in major economies to fall to pre-pandemic levels because of low productivity and ageing populations.

Central banks in the UK, the US, Europe and other nations have been increasing interest rates to combat the rate of price rises, otherwise known as inflation.

In the UK, inflation is at its highest for nearly 40 years because of rising energy prices and soaring food costs. In response, the Bank of England has been raising interest rates, and last month increased them to 4.25%.

However, in a blog the IMF said that "recent increases in real interest rates are likely to be temporary".

Newsletter

Related Articles

0:00
0:00
Close
U.S. and Britain Poised to Finalize Over $10 Billion in High-Tech, Nuclear and Defense Deals During Trump State Visit
China Finds Nvidia Violated Antitrust Laws in Mellanox Deal, Deepens Trade Tensions with US
US Air Force Begins Modifications on Qatar-Donated Jet Amid Plans to Use It as Air Force One
Pope Leo Warns of Societal Crisis Over Mega-CEO Pay, Citing Tesla’s Proposed Trillion-Dollar Package
Poland Green-Lights NATO Deployment in Response to Major Russian Drone Incursion
Elon Musk Retakes Lead as World’s Richest After Brief Ellison Surge
U.S. and China Agree on Framework to Shift TikTok to American Ownership
London Daily Podcast: London Massive Pro Democracy Rally, Musk Support, UK Economic Data and Premier League Results Mark Eventful Weekend
This Week in AI: Meta’s Superintelligence Push, xAI’s Ten Billion-Dollar Raise, Genesis AI’s Robotics Ambitions, Microsoft Restructuring, Amazon’s Million-Robot Milestone, and Google’s AlphaGenome Update
Le Pen Tightens the Pressure on Macron as France Edges Toward Political Breakdown
Musk calls for new UK government at huge pro-democracy rally in London, but Britons have been brainwashed to obey instead of fighting for their human rights
Elon Musk responds to post calling for the murder of Erika Kirk, widow of Charlie Kirk: 'Either we fight back or they will kill us'
Czech Republic signs €1.34 billion contract for Leopard 2A8 main battle tanks with delivery from 2028
USA: Office Depot Employees Refused to Print Poster in Memory of Charlie Kirk – and Were Fired
Proposed U.S. Bill Would Allow Civil Suits Against Judges Who Release Repeat Violent Offenders
Penske Media Sues Google Over “AI Overviews,” Claiming It Uses Journalism Without Consent and Destroys Traffic
Indian Student Engineers Propose “Project REBIRTH” to Protect Aircraft from Crashes Using AI, Airbags and Smart Materials
French Debt Downgrade Piles Pressure on Macron’s New Prime Minister
US and UK Near Tech, Nuclear and Whisky Deals Ahead of Trump Trip
One in Three Europeans Now Uses TikTok, According to the Chinese Tech Giant
Could AI Nursing Robots Help Healthcare Staffing Shortages?
NATO Deploys ‘Eastern Sentry’ After Russian Drones Violate Polish Airspace
Anesthesiologist Left Operation Mid-Surgery to Have Sex with Nurse
Tens of Thousands of Young Chinese Get Up Every Morning and Go to Work Where They Do Nothing
The New Life of Novak Djokovic
The German Owner of Politico Mathias Döpfner Eyes Further U.S. Media Expansion After Axel Springer Restructuring
Suspect Arrested: Utah Man in Custody for Charlie Kirk’s Fatal Shooting
In a politically motivated trial: Bolsonaro Sentenced to 27 Years for Plotting Coup After 2022 Defeat
German police raid AfD lawmaker’s offices in inquiry over Chinese payments
Turkish authorities seize leading broadcaster amid fraud and tax investigation
Volkswagen launches aggressive strategy to fend off Chinese challenge in Europe’s EV market
ChatGPT CEO signals policy to alert authorities over suicidal youth after teen’s death
The British legal mafia hit back: Banksy mural of judge beating protester is scrubbed from London court
Surpassing Musk: Larry Ellison becomes the richest man in the world
Embarrassment for Starmer: He fired the ambassador photographed on Epstein’s 'pedophile island'
Manhunt after 'skilled sniper' shot Charlie Kirk. Footage: Suspect running on rooftop during panic
Effective Protest Results: Nepal’s Prime Minister Resigns as Youth-Led Unrest Shakes the Nation
Qatari prime minister says Netanyahu ‘killed any hope’ for Israeli hostages
King Charles and Prince Harry Share First In-Person Moment in 19 Months
Starmer Establishes Economic ‘Budget Board’ to Centralise Policy and Rebuild Business Trust
France Erupts in Mass ‘Block Everything’ Protests on New PM’s First Day
Poland Shoots Down Russian Drones in Airspace Violation During Ukraine Attack
Brazilian police say ex-President Bolsonaro had planned to flee to Argentina seeking asylum
Trinidad Leader Applauds U.S. Naval Strike and Advocates Forceful Action Against Traffickers
Kim Jong Un Oversees Final Test of New High-Thrust Solid-Fuel Rocket Engine
Apple Introduces Ultra-Thin iPhone Air, Enhanced 17 Series and New Health-Focused Wearables
Macron Appoints Sébastien Lecornu as Prime Minister Amid Budget Crisis and Political Turmoil
Supreme Court temporarily allows Trump to pause billions in foreign aid
Charlie Sheen says his father, Martin Sheen, turned him in to the police: 'The greatest betrayal possible'
Vatican hosts first Catholic LGBTQ pilgrimage
×