UK economy: growth remains ‘sluggish’ as Feb figures are announced
This week the UK government have been talking all things finance as the International Monetary Fund (IMF) has estimated that the economy will grow by 1% in 2024.
Founded in 1944, the IMF are a global organisation that have been at the forefront of helping to the predict the fate of the UK economy. This week, the organisation have forecasted that the country’s output is expected to contract by 0.3% this year before rebounding to increase by 1% in 2024.
Following these figures, the IMF claimed that the UK is now at the bottom of the G7 group – an intergovernmental political forum – of advanced economies this year. As the UK is only slowly recovering from the economic crash, it has cats concerns that people are going to have to live with increased costs for longer than anticipated.
However, on a more positive note, the news released this week is better than excepted as the IMF originally predicted that the economy would shrink by 0.6% this year.
Pierre-Olivier Gourinchas, Director of Research at IMF, said: ‘The UK economy seems to be doing a little bit worse than some other comparable economies [because] there is a higher dependence on imported energy with a high share of gas – and with the gas prices we’ve had last year, that’s a major negative trade shock – there’s a fairly tight labour market and so there has been a need for fairly aggressive tightening of monetary policy.’
In the UK inflation is expected to fall from 9.1% in 2022 to 6.6% this year and 3% in 2024.
As well as IMF breaking the news about the UK’s stagnant economic recovery, the Office of National Statistics (ONS) have revealed that the economy experienced zero growth in February after being hit by the effects of the strikes by public sector workers. The news follows a shocking 0.4% jump in January.
Strikes conducted by teachers nationwide on 1st February and in some regions on 28th February had been the biggest drag on growth, according to figures from the ONS.
Although, despite the bad news, Chancellor, Jeremy Hut, has said that the UK is still set to avoid a ‘recession’ and that the economic outlook is ‘brighter than excepted.’
However, experts from financial organisations have claimed that authorities are failing to acknowledge the affects the slow economic growth will be having on small businesses.
Commenting on the news, Douglas Grant, Group CEO of Manx Financial Group PLC, said: ‘The latest GDP figures show that UK economic progress remains sluggish, generating no growth at 0.0%, providing little reassurance to small and medium sized enterprises (SMEs)as the country continues to teeter on the brink of a recession.
‘With rising interest rates and ongoing inflationary pressures, SMEs must take this as a reminder to review their existing lending structures and ensure they are prepared for further challenges.’
Additionally, William Marsters, Senior Sales Trader at Saxo UK, said: ‘The lack of positive growth will disappoint the UK Chancellor and the UK Prime Minister as the former attempts to defend weak growth projects from the IMF, while the latter has promised growth to constituents as one of his key five priorities for 2023.
‘Strikes across public services are cited to be the main contributor to the stalled economy in February. Pound Sterling moved slightly stronger after the data was published.’
Since 2021 the Bank of England have steadily increased interest rates, with the most recent incline going to 4% to 4.25% in March.
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