IMF forecasts show UK bottom of the league for growth, says shadow chancellor

The International Monetary Fund’s (IMF) forecasts show the UK to be “bottom of the league table for growth”, according to Labour’s shadow chancellor.

Rachel Reeves said the workings backed the reality for Britain, which she said was the “only major economy to be smaller today than it was before the Covid pandemic hit”.

The IMF, a major financial agency of the United Nations, has suggested that the UK will see the worst economic performance of all advanced nations.

In its latest World Economic Outlook update, its economists have downgraded their UK gross domestic product (GDP) forecast once again

Britain’s GDP is forecast to contract by 0.6% as the country battles with soaring inflation and higher interest rates.

The UK economy had previously been forecast to grow by 0.3% growth in workings published in October by the IMF, but its latest update takes a bleaker view.

Ms Reeves, speaking to broadcasters in Westminster after being granted an urgent question in the Commons about the IMF’s forecast, said: “The UK economy has got huge potential and yet the Government is failing to seize that initiative.

“We see today with these forecasts from the IMF the UK at the bottom of the league table for growth both this year and next.

“The Government needs to be doing so much more to fulfil the potential of the UK economy.”

Ministers have pointed out that the IMF has been wrong in the past when it has looked to predict UK performance.

Chancellor Jeremy Hunt said the UK “outperformed many forecasts last year” and Government minister Richard Holden told Times Radio he thought Britain “can beat those predictions”.

But Ms Reeves, asked about the IMF’s past forecasts failing to materialise, said that did not take away from the “facts” about the UK economy’s performance under 13 years of Conservative rule.

She said: “The average growth in the UK economy has been just two-thirds under the Conservatives than it was under the last Labour government.

“And the UK is now the only major economy to be smaller today than it was before the Covid pandemic hit.”

Ms Reeves swerved the question when asked whether tax cuts could shock the UK economy into growth, saying instead that Labour’s plan would be to focus on the green sector to “seize some of the opportunities and the jobs of the future”.

She said the Office for Budget Responsibility and the Bank of England were in agreement that the UK’s trade deal with the European Union, as negotiated and signed by former prime minister Boris Johnson, was “holding us back as a country”.

Tuesday marked three years since the UK’s withdrawal from the EU, although fresh trading terms were enacted only 11 months later.

The shadow cabinet member said: “It is why Labour has committed to actually making Brexit work and fixing some of the holes in the patchwork Brexit deal, because we’ve got to get growth going in our economy.”

The IMF’s grim outlook for the year ahead puts the UK far behind its counterparts in the G7 group of advanced nations and the only country – across advanced and emerging economies – expected by the agency to suffer a year of declining GDP.

But it nudged up its outlook for UK growth in 2024 to 0.9%, up from the 0.6% expansion previously forecast.