The IMF forecasts reopen the debate on the effects of Brexit on the third anniversary of the end of the transition period
The UK will be the only G7 country to experience a contraction of its economy in 2023, according to the forecasts of the International Monetary Fund (IMF). The British economy will fall by 0.6%, in contrast to a relative improvement in the most industrialized countries and even to the 0.3% growth forecast for Russia, despite the war in Ukraine.
The jug of cold water from the IMF – which has lowered the forecasts for the United Kingdom due to the increase in taxes and interest rates – has coincided with the third anniversary of the end of the Brexit transition period. Despite renewed criticism from businessmen about the impact of leaving the EU, the British Prime Minister, Rishi SunakHe once again boasted of the “Brexit freedoms” and defended the decision to “follow the path as an independent nation with confidence.”
About to celebrate 100 days in Downing Street, Sunak faces great internal pressure to change his economic policy and reduce fiscal pressure. “We are only at the beginning of our plan to meet five priorities, including growing the economy to create better jobs,” declared the premier coinciding with the third anniversary of leaving the EU.
The IMF does not mention Brexit in its forecasts and does recognize that the British economy grew more than expected (4.1%) with the end of the pandemic in 2022. Implicitly, however, the Washington-based monetary institution blames the impact of the failed budget of the ex premier Liz Truss in the fall experienced in the last quarter and in the downward revision for 2023, which initially was a slight growth of 0.3%, comparable to that of Germany.
Even so, the IMF acknowledges that the UK is going “on the right track” in the fight against inflation. The country remains in the 10% orbit, aiming for a decline of around 3.75% by the end of the year. Meanwhile, the Bank of England is expected to announce a further 4% interest rate hike on Thursday.
“We are facing a basically stagnant economy in 2023”warned on his part Paul Johnson, director of the Institute of Fiscal Studies. “We’re not going to be on the path to growth, but it’s not going to be a deep recession either.”
Johnson assures, however, that “the challenges of Brexit” explain to a large extent the downward trend of the British economy, with the fall in trade with the EU and the problems created by the lack of personnel in key sectors. High interest rates and rising mortgage rates are, in his opinion, the two other factors closely tied to the Liz Truss budget fiasco.
The hard wing of the Conservative Party is, however, putting pressure on Rishi Sunak and the Treasury Secretary, Jeremy Hunt, to give priority to economic growth in the March budget. Hunt has come under fire from businessmen for the lack of concrete proposals in his speech last week in the City of London.
The financial Guy Handspresident of Terra Firma, linked in the past with the torieswas unmarked on Tuesday with a harsh criticism of the British Government for “the complete disaster” and “the collection of lies” of Brexit, coinciding with the third anniversary of the separation.
“The only way that the Brexit that Boris Johnson pushed for would work was with total deregulation and with a Singapore-style utopia, which was what Liz Truss advocated,” Hand warned in statements to the radio of the BBC. “The biggest lie of all was that of public health, with that misleading advertisement on the bus. What the Conservatives have really done is throw the National Health Service (NHS) under the bus,” criticized the investor.
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