Rishi Sunak’s Conservative government has won the backing of top economists at the International Monetary Fund, after the Washington-based organization issued a series of bleak forecasts for the UK.
(Bloomberg) — Rishi Sunak’s Conservative government has won the backing of top economists at the International Monetary Fund, after the Washington-based organization issued a series of bleak forecasts for the UK.
Alfred Kammer, director of the European Department at the IMF, said there was “no question” that Sunak and Chancellor of the Exchequer Jeremy Hunt had brought stability to the UK following a period of turbulence.
His comments in an interview come just days after the IMF raised its forecasts for the UK economy to show a contraction of 0.3% this year, half the size of the downturn it had previously expected. Its outlook still leaves Britain among just two of the Group of Seven nations bracing for a decline this year.
“The reason why we are forecasting a shallow recession is because British households have been hit hard by the energy crisis and the increased costs,” said Kammer on Bloomberg Television in Stockholm, adding that the Treasury’s budget plan announced in March will help the situation.
“The Spring Budget has very good elements,” he said. “It’s continuing the medium term fiscal consolidation. It is supporting monetary policy in terms of the disinflation effort. And it focuses on some important structural reforms, business investment and labor force participation.”
The IMF has been downbeat on the UK since the pandemic hit. Liz Truss added friction to the relationship with the IMF during her brief term as prime minister last year by delivering a tax-cutting budget that crashed the pound and triggered a financial crisis.
Speaking to Bloomberg TV earlier this month, Hunt said the “page has turned” for the UK and that the country “was back.” Asked if this was correct, Kammer said: “Unequivocally, yes.”
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