IMF's forecasts for UK economy to be taken with 'a few pinches of salt' - report

The economy will grow by 0.6% in 2024, the slowest rate in the G7 group and considerably lower than the 1.2% growth expected in the euro area or the 1.5% forecast for the US.

However, Sky's Ed Conway said there were questions surrounding the IMF's latest UK growth forecasts.

The most important one, Conway thinks, was buried in a paragraph largely concerned with interest rates: "The Federal Reserve's policy rate is expected to peak at its current level of about 5.4%, the Bank of England to raise its to peak at about 6%."

Conway said there was an issue here, stating that while it was once true that UK interest rates were expected to peak at around 6%, that was no longer the case, with the Bank rate now predicted to have already peaked at 5.25%.

"The difference between 5.25% and 6% interest rates is, in economic terms, rather a lot," he pointed out. "Those higher rates would mean considerably more pressure on those with mortgages, more pain in the high street, more saving, less spending and, all told, a weaker economy."

Secondly, the IMF itself also acknowledges that its forecasts don't incorporate the latest set of revisions of the economy from the Office for National Statistics, upward revisions which "completely changed the complexion" of Britain's post-pandemic economic path.

Nonetheless, the outlooks for both the UK and the global economy were still rather "disappointing".

"Global growth is expected to be well below typical speeds this year and next. China's economy is facing serious trauma in the face of a property slump. While the US economy is doing far better than many had predicted, its expansion rate is, by American standards, disappointing," said Conway. "Britain, in short, is not doing well. But, contrary to the impression you might get from glancing at the IMF's numbers, it is far from an outlier."

Reporting by Iain Gilbert at Sharecast.com