While most advanced countries expected to see economic growth in 2023, the British economy is forecast to see a year of contraction, compared to previous predictions of growth.
In the latest update of its economic forecasts, the International Monetary Fund said Britain is the only G-7 economy forecast to decline in 2023, as higher energy prices and tighter fiscal and monetary policies impact growth.
Its economy is expected to shrink 0.6% in 2023, down 0.9 percentage points from October.
Rachel Reeves, the Labour Party’s shadow Treasury chief, said in the House of Commons that the Conservative government needs to do "so much more" to realize the potential of the British economy.
"The world upgraded, Britain downgraded. Growth even worse than sanctions-hit Russia," she said.
“Britain has huge potential but 13 years of Tory failure has been a drag anchor on prosperity. Today's IMF assessment holds a mirror up to the wasted opportunities and it is not a pretty sight.”
But the prime minister’s official spokesman told reporters that in fact the IMF said “UK economic policy is now on the right track," according to Sky News.
The spokesman added that the UK economy is "predicted to grow faster than Germany and Japan over the coming years."
On Monday, Transport Minister Richard Holden told Sky News that "Britain can outperform (the IMF’s) prediction like it has done for the last two years."
Economic crisis ‘a long time coming’
Kenneth Rogoff, a former chief economist at the IMF, told Anadolu that the situation in the UK economy is similar to what is happening in France, Germany, and other countries.
“So this crisis has been a long time coming. And that’s it. They are in a very difficult situation that has been caused by many successive decisions,” he said.
The country is also “suffering” the effects of Brexit, he added.
“It’s hard for either party to acknowledge that Brexit has costs. Maybe in the long run it will prove to be a good thing,” said Rogoff.
“Frankly, the big question is if the European Union in 50 years turns out to be the best thing ever, will the UK regret it? If it turns out it’s devolved into a regulatory nightmare, they’ll be very happy they left it. But either way, divorce is always painful,” he said.
However, separation sometimes “works better for both parties in the long run,” he added.
On the growing wave of strikes and protests in the UK, he said: “This is the thing that everyone agrees on: the National Health Service (NHS) is a disaster. It’s just not working, and people are going on strike about it. Even the Labour Party believes that in addition to greater spending, reform in the healthcare system is needed.”
Source: Anadolu Agency