UK on track to swerve recession, says sunnier IMF growth forecast

LONDON — The U.K. will avoid a recession this year, the International Monetary Fund said, in a boost for Chancellor Jeremy Hunt after previous gloomier predictions from the global financial body.

The IMF — which said at the start of the year that it expected the British economy to fare worse than Russia’s in 2023 — upgraded its outlook for the U.K. Tuesday. It now expects the U.K. economy to grow by 0.4 percent in 2023, an upgrade from the 0.3 percent contraction it predicted in April.

However, the fund warned that inflation remains high — and that its upgrade remains a modest one.

“The outlook for growth, while improving somewhat in recent months, remains subdued,” the IMF said.

The latest numbers were welcomed by Hunt, who said the IMF report “credits our action to restore stability and tame inflation.”

Speaking at a press conference, IMF managing director Kristalina Georgieva said that there remained “significant risks” to the agency’s outlook — though she praised the Bank of England and Hunt, who was brought in to the U.K. government to stabilize the market chaos left by his predecessor.

“What we have in this challenging context is a very responsible action from the Bank of England, tightening of monetary policy and the spring and autumn budgets that are aligning fiscal policy with the objectives of monetary policy to fight inflation,” Georgieva said.

The IMF also praised the U.K. government’s Windsor Framework deal on the Northern Ireland protocol, which was secured earlier this year following months of negotiations over post-Brexit trading rules.

The fund also expressed hope that firms and U.K. growth may benefit from a U.K. return to the EU’s Horizon research program, which Britain left when it quit the EU in 2020. Talks are ongoing between London and Brussels over the scheme.