The world economy is entering a “perilous phase” of low economic growth and high financial risk, the International Monetary Fund has warned in its latest set of assessments.
The IMF, which is holding its spring meetings in Washington this week, downgraded its outlook for global growth and said its medium term forecast for economic output was now at the weakest level since the fund began publishing these forecasts in 1990.
However its chief economist Pierre-Olivier Gourinchas added that there were also more severe risks in prospect.
He said: “We are… entering a perilous phase during which economic growth remains low by historical standards and financial risks have risen, yet inflation has not yet decisively turned the corner.”
“Below the surface,” he added, “turbulence is building, and the situation is quite fragile, as the recent bout of banking instability reminded us.
“Inflation is much stickier than anticipated even a few months ago. While global inflation has declined, that reflects mostly the sharp reversal in energy and food prices. But core inflation, excluding the volatile energy and food components, has not yet peaked in many countries.”
This cocktail of factors prompted the IMF to cut its forecast for global economic growth by 0.1 percentage points this year and next, to 2.8% and 3% respectively.
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Is Brexit to blame? The war in Ukraine? Ed Conway at the end of January taking a look at the IMF predicting the UK economy would end up behind advanced nations this year
However, the fund said that there was now a one-in-four chance of global growth falling below 2% this year, something tantamount to a global recession, and which has only happened five times since 1970 (most recently in 2009 and 2020).
The UK has received an upgrade to its economic growth forecast this year and next, but it is nonetheless forecast to be the worst performing economy in the G7 this year, shrinking by 0.3%. UK gross domestic product is slated to rise to 1% next year.
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The fund’s warnings follow the collapse of Silicon Valley Bank in the US and Credit Suisse in Europe, episodes which have raised the prospect of further financial turbulence in the coming months, as the system responds to rising interest rates.
In the World Economic Outlook, Mr Gourinchas referred to the troubles in the UK pensions market following last September’s mini-budget, saying: “The financial instability last fall in the gilt market in the United Kingdom and the recent banking turbulence in the United States with the collapse of a few regional banks illustrate that significant vulnerabilities exist both among banks and non-bank financial institutions.
“In both cases the authorities took quick and strong action and have been able to contain the spread of the crisis so far. Yet the financial system may well be tested again.”
Yet alongside these immediate concerns, there is another worry haunting policymakers as they gather in Washington for this six-monthly set of meetings: that the global economy may have lost some of its mojo.
The decline in the long term global growth rate in this latest forecast is in part down to “benign” factors – among them the fact that countries like China, which have driven global growth for more than a decade, are becoming higher income nations, with an inherently slower growth rate.
But the other worry they have is that the world is beginning to deglobalise, with many countries unravelling their supply chains and introducing new trade barriers.
Those barriers, which are rising faster than ever before, could constrict global productivity, implying weaker growth for the long run.
Responding to the IMF statement Chancellor Jeremy Hunt said:
“Thanks to the steps we have taken, the OBR [Office of Budget Responsibility] says the UK will avoid recession, and 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.”
A woman who thought she was being injected with Botox was left unable to swallow and doctors thought she had suffered a stroke – after she contracted a life-threatening illness from a potentially illegal product.
Nicola Fairley is one of dozens of people who have developed botulism linked to unlicensed anti-wrinkle injections.
She had the procedure done with her regular beautician after winning a Facebook competition for three areas of “Botox”.
Image: Nicola Fairley
“Within two or three hours my forehead and the sides of my eyes had started to freeze,” Nicola says.
“At first I thought ‘amazing’, that’s what I wanted – then it just carried on.”
Nicola was eventually sent to A&E in Durham, where she met several other patients who all had similar symptoms.
Doctors were stumped. “They thought I’d had a stroke,” she says.
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“We all had problems with our eyes, some of us with our breathing. I couldn’t swallow – they put me on nil by mouth because they were worried I would choke in the waiting room.”
Image: Doctors were worried Nicola could choke after she was injected with a suspected illegal product
It turns out all of the patients had recently had anti-wrinkle injections containing botulinum toxin.
Health officials believe they were imported, illegal products.
Botulism – the disease they caused – is so rare many doctors never see it in their entire careers.
It can cause symptoms including slurred speech and breathing problems, and can be deadly.
The disease is so unusual, and so many cases were coming in, that doctors exhausted their stocks of anti-toxin and had to ask hospitals as far away as London to get more.
The UK Health Security Agency has so far confirmed 38 cases of botulism linked to cosmetic toxin injections, but Sky News has been told of several more.
The outbreak began in the North East but cases have now been seen in the East of England and East Midlands as well.
There are only a handful of legal botulinum toxin products in the UK – of which Botox is one.
But cosmetic treatments are largely unregulated, with anyone allowed to inject products like fillers and toxins without any medical training.
Cheap, illegal products imported from overseas are easily available.
Image: Dr Steven Land
‘It’s the Wild West’
Dr Steven Land runs Novellus Aesthetics clinic in Newcastle upon Tyne. He worked for decades as an emergency medicine doctor before moving into aesthetics.
He says he has been warning health officials of an outbreak for years.
“It’s the Wild West,” Dr Land told Sky News.
“Because anyone can do this, there is a lack of knowledge around what is legal, what’s not legal, what is okay to be injected.
“These illegal toxins could have 50 units, 5,000 units or rat poison – there could be anything in there.”
Donald Trump has landed in Scotland for a four-day trip including high-level meetings – praising Sir Keir Starmer as “a good man” but calling illegal migration a “horrible invasion” that is “killing Europe”.
Mr Trump told reporters: “I like your prime minister. He’s slightly more liberal than I am… but he’s a good man… he got a trade deal done. It’s a good deal for the UK.”
The pair are expected to discuss potential changes to the UK-US trade deal which came into force last month.
Trump left Air Force One to head to Turnberry, one of his Scottish golf courses. Part of the trip will include the opening of another course in Aberdeenshire, billed as “the greatest 36 holes in golf”.
Image: Trump supporters waved as Air Force One landed. Pic: PA
“There’s no place like Turnberry. It’s the best, probably the best course in the world. And I would say Aberdeen is right up there,” the US president said.
“Sean Connery helped get me the [planning] permits. If it weren’t for Sean Connery, we wouldn’t have those great courses,” he added.
During the trip, President Trump will also hold discussions with Scotland’s First Minister John Swinney and EU Commission President Ursula von der Leyen, who is keen to secure a trade deal with the US.
Image: Donald Trump spoke to reporters after landing at Prestwick Airport, Ayrshire. Pic: AP
Mr Trump told reporters there was “a good 50-50 chance” of an agreement with the EU but added there were “maybe 20 different” sticking points.
EU diplomats say a deal could result in a broad 15% tariff on EU goods and half of the 30% Trump is threatening to impose by 1 August.
Image: He travelled to Turnberry, one of his Scottish golf resorts, amid tight security. Pic: Reuters
The US president touched on illegal immigration and gave European leaders a stark warning.
“You better get your act together or you’re not going to have Europe anymore. You got to get your act together,” he said.
“But you’re allowing it to happen to your countries and you got to stop this horrible invasion that’s happening to Europe. Immigration is killing Europe.”
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What do Scots think of Trump visit?
He was also scathing about the installation of wind turbines across the continent.
“Stop the windmills. You’re ruining your countries,” he said. “It’s so sad. You fly over and you see these windmills all over the place, ruining your beautiful fields and valleys and killing your birds.”
Domestically, Mr Trump faces the biggest political crisis of his second term in office over his administration’s handling of files linked to disgraced financier and sex offender Jeffrey Epstein, who died in prison in 2019.
He faced another round of questions after stepping off Air Force One.
“You’re making a big thing over something that’s not a big thing. I’m focused on making deals, not on conspiracy theories that you are,” he said.
Mr Trump added that “now’s not the time” to discuss a pardon for Ghislaine Maxwell, Epstein’s imprisoned accomplice.
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While the president’s visit did attract some enthusiastic flag-waving supporters at Prestwick Airport, he is also likely to trigger a number of protests, prompting Police Scotland to call in support from other forces in the UK.
The Stop Trump Scotland group has planned demonstrations on Saturday in Edinburgh, Aberdeen and Dumfries.
About 70% of Scots have an unfavourable opinion of Mr Trump, while 18% have a positive opinion, an Ipsos poll in March found.
Mr Trump is staying at his Turnberry property on Scotland’s west coast this weekend, before travelling to Aberdeenshire on Monday, where he will open a second 18-hole course.
He is due to return to the UK in September for a state visit hosted by the King – the first world leader in modern times to undertake two UK state visits.
Donald Trump has landed in Scotland ahead of a four-day trip, which includes high-level meetings, praising Sir Keir Starmer as “a good man” but also calling illegal migration a “horrible invasion” that was “killing Europe”.
Mr Trump told reporters: “I like your prime minister. He’s slightly more liberal than I am… but he’s a good man… he got a trade deal done. It’s a good deal for the UK.”
The pair are expected to discuss potential changes to the UK-US trade deal which came into force last month.
Trump left Air Force One to head to Turnberry, one of his Scottish golf courses. Part of the trip will include the opening of another course in Aberdeenshire, billed as “the greatest 36 holes in golf”.
Image: Trump supporters waved as Air Force One landed. Pic: PA
“There’s no place like Turnberry. It’s the best, probably the best course in the world. And I would say Aberdeen is right up there,” the US president said.
“Sean Connery helped get me the [planning] permits. If it weren’t for Sean Connery, we wouldn’t have those great courses,” he added.
During the trip, President Trump will also hold discussions with Scotland’s First Minister John Swinney and EU Commission President Ursula von der Leyen, who is keen to secure a trade deal with the US.
Image: Donald Trump spoke to reporters after landing at Prestwick Airport, Ayrshire. Pic: AP
Mr Trump told reporters there was “a good 50-50 chance” of an agreement with the EU but added there were “maybe 20 different” sticking points.
EU diplomats say a deal could result in a broad 15% tariff on EU goods and half of the 30% Trump is threatening to impose by 1 August.
Image: He travelled to Turnberry, one of his Scottish golf resorts, amid tight security. Pic: Reuters
The US president touched on illegal immigration and gave European leaders a stark warning.
“You better get your act together or you’re not going to have Europe anymore. You got to get your act together,” he said.
“But you’re allowing it to happen to your countries and you got to stop this horrible invasion that’s happening to Europe. Immigration is killing Europe,” he told reporters.
Please use Chrome browser for a more accessible video player
1:30
What do Scots think of Trump visit?
He was also scathing about the installation of wind turbines across Europe.
“Stop the windmills. You’re ruining your countries,” he said. “It’s so sad. You fly over and you see these windmills all over the place, ruining your beautiful fields and valleys and killing your birds.”
Domestically, President Trump faces the biggest political crisis of his second term in office over his administration’s handling of files linked to disgraced financier and sex offender Jeffrey Epstein, who died in prison in 2019.
He faced another round of questions after stepping off Air Force One. “You’re making a big thing over something that’s not a big thing. I’m focused on making deals, not on conspiracy theories that you are,” he said.
Mr Trump added that “now’s not the time” to discuss a pardon for Ghislaine Maxwell, Epstein’s imprisoned accomplice.
Please use Chrome browser for a more accessible video player
While the president’s visit did attract some enthusiastic flag-waving supporters at Prestwick Airport, he is also likely to trigger a number of protests, prompting Police Scotland to call in support from other forces in the UK.
The Stop Trump Scotland group has planned demonstrations on Saturday in Edinburgh, Aberdeen and Dumfries.
About 70% of Scots have an unfavourable opinion of Trump, while 18% have a positive opinion, an Ipsos poll in March found.
President Trump is staying at his Turnberry property on Scotland’s west coast this weekend, before travelling to Aberdeenshire on Monday, where he will open a second 18-hole course.
He is due to return to the UK in September for a state visit hosted by the King – the first world leader in modern times to undertake two UK state visits.