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Britain’s economic reputation has been dealt a further blow after the International Monetary Fund (IMF) forecast that this year the UK economy will fare worse than any other country in the developed world – including Russia.

In the latest update of its economic forecasts, the IMF said that it expected the UK’s gross domestic product (GDP) to contract by 0.6% in 2023.

To add further humiliation for the chancellor and prime minister, even as Britain’s outlook was downgraded, most other countries around the world saw their forecasts upgraded.

But the Fund said that while the broader global economy was doing better than expected, with inflation having peaked and investment beginning to turn around, the UK economy would face a downgrade “reflecting tighter fiscal and monetary policies and financial conditions and still-high energy retail prices weighing on household budgets.”

The UK had previously been forecast to grow by 0.3% this year and 0.6% next year.

Now, said the Fund, it should expect -0.6% this year and 0.9% growth in 2024.

The comments are especially awkward for the Treasury, which has been criticised by some for its plans to raise taxes and reduce the budget deficit in coming years, resulting in an increase in costs for businesses and households, even as they continue to battle a cost of living crisis.

Up until recently, chancellor Jeremy Hunt had contextualised the UK’s relatively weak growth by pointing to the fact that the IMF’s recent forecasts projected that a third of countries were facing a recession.

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However, the Fund has now upgraded its growth projections for Italy and Germany, with the result that both will now grow more than the UK in 2023.

Indeed, Britain’s -0.6% GDP is the worst of any economy included in its latest forecast update, including Russia – which despite facing sanctions from most of the West is projected to grow by 0.3%.

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Why EY sees weaker 2023 outlook

Chancellor says UK ‘not immune’ from pressure

Mr Hunt said of the forecast: “The governor of the Bank of England recently said that any UK recession this year is likely to be shallower than previously predicted, however these figures confirm we are not immune to the pressures hitting nearly all advanced economies.

“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.”

The IMF said it now expected the global economy to expand by 2.9% in 2023.

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UK ‘could be in for first quarter contraction’

Although this is down from the 3.4% in 2022, it is nonetheless 0.2 percentage points faster than the Fund previously forecast in October.

It said: “Adverse risks have moderated since the October 2022 [World Economic Outlook].

“On the upside, a stronger boost from pent-up demand in numerous economies or a faster fall in inflation are plausible.

“On the downside, severe health outcomes in China could hold back the recovery, Russia’s war in Ukraine could escalate, and tighter global financing conditions could worsen debt distress.”

After China’s decision to open up its economy and ditch its zero-COVID policy, the Fund upgraded its GDP projection from 4.4% to 5.2% this year.

It said the US would grow by 1.4%, rather than its previous projection of 1%.

Germany, which was previously forecast to shrink by 0.3%, is now slated to grow by 0.1%.

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Israel to continue with Gaza City offensive despite talks to free Hamas hostages

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Israel to continue with Gaza City offensive despite talks to free Hamas hostages

Israel will resume negotiations with Hamas for the release of all hostages captured during the October 7 attack, Benjamin Netanyahu has said – but its military will continue its Gaza City offensive despite international outcry.

The remarks from Israel’s prime minister are the first since Hamas agreed to a temporary ceasefire proposal.

Talks will also be with a view to ending the war, but Mr Netanyahu said it must be on “terms acceptable to Israel”.

In the meantime, the Israel Defence Forces (IDF) have begun calling medics and international organisations in northern Gaza to encourage them to evacuate to the south ahead of the expanded operation in Gaza City.

Many of Israel’s closest allies have urged the government to reconsider. Some Israelis fear it could doom the remaining 20 or so living hostages taken by Hamas-led militants in the 7 October 2023 attack which ignited the war.

Israel plans to call up 60,000 reservists and extend the service of 20,000 more.

Displaced Palestinians fleeing northern Gaza. Pic: Reuters
Image:
Displaced Palestinians fleeing northern Gaza. Pic: Reuters

Speaking to soldiers near Israel’s border with Gaza, Mr Netanyahu said he was still set on approving plans for defeating Hamas and capturing Gaza City.

“At the same time I have issued instructions to begin immediate negotiations for the release of all our hostages and an end to the war on terms acceptable to Israel,” he said.

“These two things – defeating Hamas and releasing all our hostages – go hand in hand,” he added.

The latest ceasefire proposal drawn up by Egypt and Qatar is almost identical to an earlier one that Israel accepted before the talks stalled last month.

The proposal would include the release of some hostages in exchange for Palestinian prisoners, a pullback of Israeli forces and negotiations over a lasting ceasefire.

An Israeli strike on a tent camp in Deir Al-Balah. Pic: Reuters
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An Israeli strike on a tent camp in Deir Al-Balah. Pic: Reuters

‘Don’t tell us where to build’

Israeli strikes killed at least 36 Palestinians across Gaza on Thursday, according to local hospitals, including at a tent camp in Deir al-Balah.

Meanwhile, Israel’s ambassador to the UK, Tzipi Hotovely, was summoned to the Foreign Office in response to a controversial West Bank settlement plan which has been given final approval.

The project, known as the E1 settlement, would effectively cut off the occupied West Bank from East Jerusalem and divide the territory in two.

The UK and 21 international partners have released a statement to condemn the decision “in the strongest terms” calling it “a flagrant breach of international law” and “critically undermining a two-state solution”.

Ms Hotovely gave Sky News her response to the meeting: “I said we wouldn’t tell the British where to build in London. Don’t tell us where to build in Jerusalem, our capital. We see E1 as part of Greater Jerusalem.”

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What would a two-state solution look like?

UK warns of ‘horrifying starvation’

The UK has also responded to comments from the head of the UN Palestinian refugee agency UNRWA that famine in Gaza is “deliberate” and being used as an “instrument of war”.

Minister for the Middle East, Hamish Falconer, has called for a “comprehensive [peace] plan to end this misery and get to a long-term settlement”.

“Israel must immediately and permanently lift all barriers preventing aid reaching the people of Gaza to prevent the horrifying starvation in the Strip continuing,” he added.

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Palestinians wait to receive food from a charity kitchen in Khan Younis. Pic: Reuters
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Palestinians wait to receive food from a charity kitchen in Khan Younis. Pic: Reuters

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Demand for Gaza media access

The Media Freedom Coalition, which includes the UK and 50 other countries, has called on Israel to allow foreign media access into Gaza.

In a joint statement, the coalition, which is a partnership of countries working to defend media freedom, urged Israel to “allow immediate independent foreign media access” and “afford protection for journalists operating in Gaza”.

They said this was in light of the “unfolding humanitarian catastrophe in Gaza”.

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Israel maintains pressure on Gaza City as ‘first stages of attack begin’

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Israel to continue with Gaza City offensive despite talks to free Hamas hostages

Gaza City residents say Israel carried out intense overnight bombardments as it prepares a controversial offensive to take control of the area.

Sixty-thousand reservists are being called up after Benjamin Netanyahu‘s security cabinet approved the plan earlier this month.

UN chief Antonio Guterres has warned of more “death and destruction” if Israel tries to seize the city, while France’s Emmanuel Macron said it would be a “disaster” that would lead to “permanent war”.

Live – UN warns of ‘forcible transfer’ as forces advance on Gaza City

Hundreds of thousands of people could end up being forcibly displaced – a potential war crime, according to the UN’s human rights office.

Gaza’s health ministry said at least 70 people had been killed in Israeli attacks in the past 24 hours, including eight people in a house in the Sabra suburb of Gaza City.

Israel currently controls about 75% of the Gaza Strip, but Prime Minister Netanyahu has said Israel must take Gaza City to “finish the job” and defeat Hamas.

More on Gaza

Mr Netanyahu and his ministers are due to meet on Thursday to discuss the plans, according to Israeli media.

Military spokesperson Effie Defrin said earlier that “preliminary operations and the first stages of the attack” had begun – with troops operating on the outskirts of Gaza City.

Israel has said it will order evacuation notices before troops move in but satellite images show thousands of people have already left.

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Aftermath of fresh Israeli strikes on Gaza

Residents said shelling has intensified in the Sabra and Tuffah neighbourhoods and that those fleeing have gone to coastal shelters or to central and southern parts of the Strip.

The decision to stay or leave is an agonising choice for many.

“We are facing a bitter-bitter situation, to die at home or leave and die somewhere else, as long as this war continues, survival is uncertain,” said father of seven Rabah Abu Elias.

“In the news, they speak about a possible truce, on the ground, we only hear explosions and see deaths. To leave Gaza City or not isn’t an easy decision to make,”

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Sky’s Adam Parsons explains what is in the new Israel-Hamas ceasefire deal.

Most of the Israeli reservists being summoned are not expected to be in a frontline combat role and the call-up is set to take a while.

The window could give mediators more time to convince Israel to accept a temporary ceasefire.

Hamas has already agreed to the proposal – envisaging 10 living hostages and 18 bodies being released in return for a 60-day truce and the freedom of about 200 Palestinian prisoners.

Israel hasn’t officially responded, but insists it wants all 50 remaining hostages released at once. Only 20 of them are still believed to be alive.

The war started nearly two years ago when a Hamas terror attack killed about 1,200 people and kidnapped around 250.

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Tents abandoned as Palestinians flee Israeli advance

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What would a two-state solution look like?

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More than 62,000 Palestinians have been killed in the war, according to Gaza’s health ministry.

The figure doesn’t break down how many were Hamas members, but it says women and children make up more than half.

Two more people also died of starvation and malnutrition in the past 24 hours, the ministry said on Thursday, taking the total to 271, including 112 children.

COGAT, the body controlling aid into Gaza, said 250 aid trucks entered on Wednesday, with 154 pallets air-dropped.

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Police in Kenya begin exhuming shallow graves of suspected cult victims

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Police in Kenya begin exhuming shallow graves of suspected cult victims

Police, pathologists and grave diggers have started the exhumation of 27 shallow graves in Kenya’s Kilifi County.

The remains are believed to be of followers of a deadly cult in Chakama Ranch, a part of the Shakahola Forest.

In 2023, more than 400 mass graves were discovered in the same forest, all members of controversial preacher Paul Mackenzie’s church. They were encouraged to starve themselves to death to get into heaven.

It remains one of the world’s worst cult-related tragedies. Mackenzie is still in jail and faces numerous charges of terrorism, child torture and murder.

Six bodies were exhumed in Chakama Ranch, a part of the Shakahola Forest, today
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Six bodies were exhumed in Chakama Ranch, a part of the Shakahola Forest, today

The remote forest has again been turned into a crime scene.

Morticians were seen carrying out body bag after body bag, some containing the remains of children believed to have been starved to death.

State pathologist Dr Richard Njoroge said this is just the beginning, as investigators expect to find many more bodies: “Today we managed to exhume six.

“Of the six graves, we found five bodies and then also around that area we found ten different scattered body parts, scattered in different places on the surface.”

Eleven suspects have already been arrested in connection with these deaths and will appear in court on Friday.

Police are investigating links to Mackenzie and members of his Good News International Church.

At the exhumation today, pathologists said they were still working to identify the bodies of those exhumed from Mackenzie’s cult.

“We had 453 at the closure of that exercise, I think, we released around 33 or 34 last time. So, from there are 419 remaining,” Dr Njoroge explained.

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Police have encouraged families in the area with missing loved ones to come forward and provide their DNA samples, as efforts to identify the dead continue.

Kenya is grappling with a rise in religious extremism and many churches operating informally.

Parliament passed several preliminary bills aimed at regulating religious organisations last year, but implementation has stalled after resistance from church leaders.

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