World economy entering ‘perilous phase’ with UK to perform worst in G7 this year, IMF says
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.
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.
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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.”
UK
Epping council demands government ‘immediately’ close asylum hotel – as Home Office works to ‘restore order’
Epping council has unanimously voted to urge the government to shut a hotel housing asylum seekers after a series of protests.
Epping Forest District Council in Essex passed a motion calling for the Bell Hotel to be “immediately and permanently” closed “for the purposes of asylum processing”.
Several demonstrations have been held outside the hotel since 13 July, after an asylum seeker was charged with allegedly attempting to kiss a 14-year-old girl.
Police have arrested 18 people and charged nine in connection with the protests.
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Eight officers injured during migrant protest
Hadush Gerberslasie Kebatu, 38, from Ethiopia, denied sexually assaulting the 14-year-old girl at Chelmsford Magistrates’ Court last week and will stand trial in August.
The Essex Police, Fire and Crime Commissioner has also reportedly urged the home secretary to review the use of the hotel for housing asylum seekers.
In a letter to Yvette Cooper, Roger Hirst said the hotel is unsuitable for housing migrants and is “clearly creating community tension”, the Telegraph reported.
Protests in Epping turned violent last week
Home Office ‘working to restore order’
The Home Office has vowed to “restore order,” threatening on Friday to make asylum seekers homeless if they refuse a change of accommodation.
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It said a new “failure to travel” policy is looking to tackle “non-compliance by asylum seekers” and will ensure individuals who are moved from hotels to suitable alternative accommodation must take it.
Those who refuse to move without a valid reason will now risk losing their housing and support, the Home Office said.
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Epping migration protest in focus
Dame Angela Eagle, minister for border security and asylum, said: “We are working to close hotels, restore order, and put fairness and value for money at the heart of our asylum system.
“This government is making those necessary decisions to protect the taxpayer and uphold the integrity of our borders.”
Asked specifically about the Epping Forest District Council vote, the Home Office said: “We’ll continue to work closely with local police and community partners, in Epping and across the country, as we fix this broken system.”
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Eight officers injured
Protests outside the Bell Hotel last Thursday began peacefully but escalated into what police described as “scattered incidents of violence,” leaving eight officers injured.
Police are braced for further protests, vowing to act swiftly if unrest spreads.
UK
There were ‘failings’ in care of ex-England cricketer Graham Thorpe in months before he died, coroner says
The actor who played PC Reg Hollis in hit TV series The Bill has been praised by officers after helping them arrest a shoplifter.
Jeff Stewart stepped in when a thief attempted to escape on a bicycle in Southampton on Wednesday.
In a statement, a Hampshire Constabulary spokesman said: “The thief, 29-year-old Mohamed Diallo, fell off the bike during his attempts to flee, before officers pounced to make their arrest.
“To their surprise, local TV legend Jeff Stewart, who played PC Hollis for 24 years in The Bill, came to their aid by sitting on the suspect’s legs while officers put him in cuffs.
(L-R) Jeff Stewart, Roberta Taylor, Mark Wingett, Trudie Goodwin and Cyril Nri celebrating The Bill’s 21st anniversary in 2004. Pic: PA
“In policing you should always expect the unexpected, but this really wasn’t on The Bill for this week.”
The Bill was broadcast on ITV between 1984 and 2010 and featured the fictional lives of police officers from the Sun Hill police station in east London.
Mr Stewart, who was among the original cast, appeared in more than 1,000 episodes as PC Hollis.
Police released footage showing their pursuit of a shoplifter in Southampton. Pic: Hampshire Constabulary
As the suspect falls to the floor, PC Hollis (aka Jeff Stewart) sits on his legs. Pic: Hampshire Constabulary
In praising Mr Stewart’s actions, the force said: “Long since retired from Sun Hill station – but he’s still got it.”
Police from the Bargate Neighbourhoods Policing Team were alerted by staff at a Co-op store in Ocean Way to a suspected shoplifter on Wednesday.
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Mohamed Diallo, 29, of Anglesea Road, Southampton, was subsequently charged with five offences of theft relating to coffee, alcohol and food from the Co-op and two other Sainsbury’s stores on three dates in April and July.
He pleaded guilty at Southampton Magistrates’ Court on Thursday and was bailed to be sentenced on August 29.
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