The International Monetary Fund has depicted a poor outlook for the global economy, while stating that the UK government's plans for unfunded tax cuts would complicate the fight against inflation.
The IMF's monthly world economic outlook, published yesterday (11 October), stated that there was a growing risk of global recession, dropping GDP growth forecasts to just 2.7% from previous estimates of 3.2%.
This is the lowest growth forecast that the IMF has published since 2001, except during the coronavirus pandemic and global financial crisis.
It added that there was a 25% chance of growth falling below 2%, which has only happened five times in the last 50 years, and twice since 1982, in 2009 and 2020.
UK unemployment rate falls to lowest levels since 1974
Looking to the UK, the IMF said that "a significant slowdown is projected", with GDP growth forecast at 3.6% for this year and just 0.3% in 2023. It attributed this to high inflation and tighter monetary policy negatively affecting both consumer spending and business investment.
The IMF noted that the forecast had been prepared before the Mini Budget, adding that it is "expected to lift growth somewhat above the forecast in the near term, while complicating the fight against inflation".
It forecast that UK inflation would sit at 6.3% by the end of next year, more than every eurozone member except Slovakia.
