UK set to grow less than expected this year as IMF revises forecasts down

Published

4 weeks ago

April 16, 2024

admin

The UK economy is going to grow less than expected this year – with the International Monetary Fund warning the country will remain the second worst performer in the G7.

Newly revised forecasts indicate the UK’s gross domestic product will expand by just 0.5% in 2024 – a slight downgrade from previous estimates in January – compared with global growth of 3.2%.

However, UK GDP is tipped to increase by 1.5% in 2025 – making it the third-best performer among G7 nations – as households recover following a prolonged cost of living crisis.

According to the IMF, inflation in the British economy will remain at about 2.5% for the rest of this year but fall towards the Bank of England’s target of 2% next year.

Follow latest: Financial markets take Middle East escalation in their stride

When looked at per head – with output split across the UK’s population – GDP flatlines, with no growth at all for 2024 and 1.1% in 2025.

This metric gives a better sense of living standards and how the economy feels for individuals by adjusting for the UK’s growing population with record legal immigration flows.

According to the IMF, the global economy has been “remarkably resilient” over the past two years – but the escalating conflict in the Middle East could push up food and energy prices around the world.

Pierre-Olivier Gourinchas, the IMF’s director of research, said: “Yet, despite many gloomy predictions, the world avoided a recession, the banking system proved largely resilient, and major emerging market economies did not suffer sudden stops.”

The IMF believes lower-income countries would be harder hit if food, energy and transport prices rose.

While negative risks include a slow recovery of China’s troubled property sector, economists believe the outlook could be improved if elections being held around the world lead to tax cuts and a short-term boost to activity.

Overall, global output is expected to grow by 3.2% this year – an 0.1 percentage point rise from its previous report in January.

Both the Conservative government and Labour opposition have staked their successes on a growing economy.

Prime Minister Rishi Sunak made economic growth one of his five key priorities at the start of 2023 – but the UK entered a recession late last year.

Labour is hoping more growth will allow for greater tax takes and generate money to fund increased public service spending.

It has adopted the same rules on borrowing as the Tories and said it will not grow debt.

A HM Treasury spokesperson said: “The forecast for growth in the medium term is optimistic, but like all our peers, the UK’s growth in the short term has been impacted by higher interest rates, with Germany, France and Italy all experiencing larger downgrades than the UK.

“Today’s report shows we are winning the battle against high inflation, with the IMF forecasting that it will fall much faster than previously expected.

“With inflation falling, wages rising, and the economy turning a corner, we have been able to lower taxes for 29 million people, as part of our plan to reward work and grow the economy.”

Politics

Philippines begins Peso-backed stablecoin sandbox testing

Published

1 hour ago

May 13, 2024

admin

Philippines begins Peso-backed stablecoin sandbox testing

The test aims to evaluate the PHPC stablecoin’s real-world performance, its impact on the local fiat ecosystem, and its potential uses, including payments, trading and DeFi applications.

Politics

Next few years will be ‘most dangerous’ UK has ever known, Rishi Sunak to say in ‘major’ speech

Published

4 hours ago

May 13, 2024

admin

Next few years will be 'most dangerous' UK has ever known, Rishi Sunak to say in 'major' speech

Rishi Sunak will give a speech on Monday setting out “bold ideas to change society” – as he seeks to regain momentum following the defection of one of his MPs to Labour and a hammering at the local elections.

In what is being billed by Downing Street as a “major speech” in central London, the prime minister will outline “the stark choice facing the UK public” ahead of the general election later this year.

Mr Sunak has suggested he will go to the polls in the autumn, with Foreign Secretary Lord Cameron telling Sky News on Sunday that voters need time “to see our plan is working”.

In a bid to revive his faltering premiership, the Tory leader will say: “I have bold ideas that can change our society for the better, and restore people’s confidence and pride in our country.

“I feel a profound sense of urgency. Because more will change in the next five years than in the last 30.

“I’m convinced that the next few years will be some of the most dangerous yet most transformational our country has ever known.”

👉 Tap here to follow Politics at Jack and Sam’s wherever you get your podcasts 👈

It is not clear what specific ideas the prime minister will set out.

A trail of the speech released by Downing Street says he will discuss safeguarding the nation’s security against threats like war and rising global immigration.

Mr Sunak will also set out his intention to capitalise safely on the opportunities presented by artificial intelligence.

He will go on to say: “Our country stands at a crossroads.

“Over the next few years, from our democracy to our economy to our society – to the hardest questions of war and peace – almost every aspect of our lives is going to change.

“How we act in the face of these changes – not only to keep people safe and secure but to realise the opportunities too – will determine whether or not Britain will succeed in the years to come.

“And this is the choice facing the country.”

The speech comes after a difficult week for Mr Sunak, who faced his second defection to Labour after Dover MP Natalie Elphicke crossed the floor to join the opposition benches shortly before PMQs on Wednesday.

Ms Elphicke, considered to be on the right of the Tory party, blamed the “broken promises of Rishi Sunak’s tired and chaotic government”, and said key deciding factors for switching have been “housing and the safety and security of our borders”.

The shock move made her the second Tory MP to join the Labour Party in 11 days after former minister Dan Poulter defected to the opposition, blaming NHS “chaos”.

Mr Sunak has also come under pressure after the Conservatives suffered a mauling at the local elections, losing nearly 500 council seats, the Backpool South by-election and the West Midlands mayoralty in a bruising set of results.

In the wake of the defeats, Mr Sunak was facing calls to tack both further right and further to the centre.

Time is running out to make up ground against Labour ahead of the election, which has to be held by 25 January at the latest.

Politics

Police Scotland’s chief constable: SNP finance probe heading to prosecutors ‘within weeks’

Published

4 hours ago

May 13, 2024

admin

Police Scotland's chief constable: SNP finance probe heading to prosecutors 'within weeks'

The police investigation involving Nicola Sturgeon’s husband is “moving on” with prosecutors to receive a file within weeks, Scotland’s most senior officer has told Sky News.

The former first minister and SNP leader’s spouse, Peter Murrell, has been charged in connection with embezzlement of party funds.

In her first interviews since taking on the UK’s second biggest police force, Chief Constable Jo Farrell insisted her officers are “objective” but refused to be drawn on whether the long-running probe will end imminently.

The investigation, dubbed Operation Branchform, was launched in July 2021 after officers received complaints about how SNP donations were used.

There were questions about more than £660,000 raised for a second Scottish independence referendum campaign.

Police Scotland has said Nicola Sturgeon remains under investigation after she was arrested and released without charge in 2023.

The SNP’s former treasurer, Colin Beattie, was also detained for almost 12 hours for questioning in spring last year.

The 72-year-old has told Sky News he had heard “nothing at all” from police recently.

Murrell, 59, was chief executive of the SNP for two decades.

He quit the role weeks before his arrest and resigned his SNP membership in the wake of his police charge.

The probe has involved detectives seizing a £100,000 motorhome from outside the home of one of Murrell’s elderly relatives.

Officers concluded in April there is sufficient evidence to charge Murrell in connection with embezzlement of party funds.

The next stage is for Scotland’s prosecution service, the Crown Office, to receive a report on the case from police and decide whether to proceed to court.

A Crown Office spokesman said: “All (of) Scotland’s prosecutors act independently of political interference.

“As is routine, to protect the integrity of ongoing investigations, we do not comment in detail on their conduct.”

Chief Con Farrell was questioned by Sky News about why the investigation was taking so long to conclude.

She said: “It’s a live investigation, complex investigation and the matter has been progressed, and we expect the report to go to the Crown Office in a matter of weeks.”

Asked about this probe continuing in a general election year, she said: “We’ve investigated allegations. That’s moving on.

“We have very skilled, professional, objective individuals working on that case.”

The senior officer refused to say when the SNP probe would be fully concluded or whether other individuals would face further questions.

“I’m not going to make a commentary on the length of it. One person’s been charged, the report will go to the Crown Office and it’s a live investigation,” she said.

Ms Sturgeon unexpectedly announced her resignation as SNP leader and first minister of Scotland months before police arrested her and her husband.

She has always insisted the probe never played any part in her sudden departure from office.