United Kingdom: 2023 Article IV Consultation-Press Release; Staff Report; and Statement by the Executive Director for the United Kingdom

July 11, 2023

Preview Citation

Format: Chicago

United Kingdom: 2023 Article IV Consultation-Press Release; Staff Report; and Statement by the Executive Director for the United Kingdom, (USA: International Monetary Fund, 2023) accessed November 8, 2024

Summary

Market stress following the September 2022 'mini-budget' has dissipated, in the context of a successful financial stability intervention by the Bank of England (BoE) and two prudent budgets. Post-Brexit uncertainty has declined somewhat due to the Windsor Framework agreement to resolve disputes around the Northern Ireland Protocol. Still, the economy faces several challenges. The post-pandemic recovery was disrupted by the sharp energy price shock due to Russia’s war in Ukraine; labor force participation has declined, mainly on account of rising long-term illness; and large policy rate increases—needed to arrest high and sticky inflation—have tightened financial conditions. Accordingly, and despite recent upgrades, GDP growth is forecast at a modest 0.4 percent for 2023, followed by 1 percent growth in 2024. Lower energy prices and emerging economic slack is projected to help reduce headline inflation to around 5¼ percent by end-2023 and to the 2 percent target by mid-2025. Risks are tilted to the downside for growth and to the upside for inflation. Tighter-than-expected global financial conditions present the key downside risk to growth, while robust wage growth and greater inflation persistence pose upside risks to inflation.

Subject: Energy prices, Financial institutions, Financial sector policy and analysis, Financial sector stability, Inflation, International organization, Monetary policy, Nonbank financial institutions, Prices, Public debt

Keywords: BoE website, Energy prices, Financial sector stability, Global, Inflation, Inflation expectation, Inflation projection, May inflation outturn, Nonbank financial institutions, UK financial system

Publication Details

Pages:

112
Volume:

---
DOI:

---
Issue:

---
Series:

Country Report No. 2023/252
Stock No:

1GBREA2023001
ISBN:

9798400248627
ISSN:

1934-7685

FACTSHEETS

RESOURCES

TOPICS

Flagship Publications

Other Publications

IMF reports and publications by country

Regional Offices

All News

See Also

For Journalists

Press Center

RESOURCES

FLAGSHIPS

KEY SERIES

IMF NOTES

IMF Staff Country Reports