On Tuesday, the International Monetary Institution (IMF) lowered its growth forecast for Britain for 2025 after increased estimates of the size of the economy in previous years left the potential for recovery less than previously expected.
Britain's economic prospects and the Conservative Party's record since 2010 are often the topic of political debate with national elections expected to take place in the second half of the year.
Overall, the IMF forecast, part of a wider global update, shows Britain's GDP growth rising from 0.5% in 2023 to 0.6% in 2024 and 1.6% in 2025. At the same time amid falling energy prices pushing down inflation, increasing disposable income and enable the Bank of England to cut rates in the second half of 2024.
The IMF's latest estimate for 2025 is 0.4 percentage points below the previous estimate made in October, reflecting "reduced room for growth to catch up after higher statistical estimates of output levels throughout the pandemic period."
Growth in 2023 and 2024 remains weak based on historical data and in the meantime only Germany affected by the surge in European gas prices after Russia invaded Ukraine in 2022, is expected to perform worse. In 2025, Britain's growth is expected to be slightly below the average of both the European zone and among advanced economies.
Chancellor of the Exchequer Jeremy Hunt welcomed the latest IMF forecasts which showed growth to pick up, partly due to his recent business and jobs tax cuts. "It is still too early to know whether further tax cuts will be able to generate the economy or not ... but we believe that tax cuts can make a big difference in stimulating growth," he said.
Opposition parties on the other hand have emphasized the decline in living standards due to recent high inflation and weak wage growth before the pandemic.
