The International Monetary Fund says the UK will no longer face a recession this year

Written by David Milliken and Sarah Young

LONDON (Reuters) – The International Monetary Fund said on Tuesday it no longer expects a recession in Britain this year, praising steps the government has taken to stabilize the economy and fighting inflation and warning against early tax cuts at the election.

According to the International Monetary Fund, GDP will grow by 0.4% in 2023, instead of contracting by 0.3% as expected in April. The previous forecast was the weakest for any major economy this year, but the new forecast will leave Britain ahead of peers in the rich world such as Germany.

Although the International Monetary Fund warned that the outlook remains weak, it said Prime Minister Rishi Sunak’s government was on the right track, in contrast to its concerns about the direction of economic policy under his predecessor, Liz Truss.

“The British authorities have taken decisive and responsible steps in recent months,” Kristalina Georgieva, managing director of the International Monetary Fund, told a news conference on Tuesday. “What we’re seeing is that the government is prioritizing, and rightly so, fighting inflation.”

Sunak and Finance Minister Jeremy Hunt took office in October after a short term that wreaked havoc on financial markets.

The International Monetary Fund said the improving outlook for the UK reflects unexpectedly resilient demand, supported in part by faster-than-usual wage growth, higher government spending and improving business confidence.

Also contributing to this are lower energy costs, after sharp increases last year, and the normalization of global supply chains.

(Edited in Spanish by Carlos Serrano)