The IMF’s latest forecast for the UK shows that, after the fastest growth in the G7 for two consecutive years, the UK is expected to show the slowest growth in 2023 and indeed be the only G7 economy with negative annual growth.
Remainer Twitter, having ignored the UK’s rapid growth of the two previous years, is all a flutter with this negative forecast for the UK. It seems slightly odd to pay attention only to negative news and ignore positive news.
Moreover, the history of the UK growing faster than the other G7 economies is actual. The negative prediction is forecast.
And sadly, the IMF’s track record in forecasting is not the strongest, with a particular tendency to underestimate the outlook for the UK. Its last forecast for the UK for last year, released as late as 11 October, was still a whole 0.5% lower than its current estimate.
The latest forecast is already out of date by the time it has arrived, since it takes no account of the dramatic fall in the gas price this year which will raise all forecasts. My own colleagues at Cebr will release updated forecasts that take this into account next week.
The fact that IMF forecasts tend to underestimate the UK and that a bad 2023 follows rapid growth in the previous two years should not hide the fact that UK prospects have deteriorated. Many blame Brexit, but it’s hard to see, looking at the details, how this can be the main cause, even if it has clearly been contributory. I would point much more attention to the dramatic weakening of public service productivity (almost completely ignored by Remainer twitter and many economic correspondents) which has created a fiscal crisis and caused tax cuts to be reversed.
Douglas McWilliams is founder of Cebr, the economics consultancy.