London – The International Monetary Fund said on Tuesday that it expects the UK to avoid a recession and “maintain positive growth” in 2023.

The Fund said resilient demand in the context of lower energy prices encouraged positive, albeit “weak” expectations.

The United Nations financial agency noted that British economic activity has slowed significantly, compared to last year, and that inflation, currently at 10.1%, remains “stubbornly high”. The British economy is still feeling the impact of Russia’s all-out invasion of Ukraine, along with lingering supply scars from the Covid-19 pandemic.

British Finance Minister Jeremy Hunt said on Tuesday that “the job is not done yet” in terms of tackling inflation and improving Britain’s growth prospects. He highlighted that high inflation and high energy costs were challenges for the UK and internationally.

“We work every day to grow our economy and deliver on that and other government priorities, and the IMF says we’re doing just that,” Hunt told an IMF news conference.

The International Monetary Fund said in its report that the United Kingdom has weathered the recent global banking pressures well, referring to the recent collapse of Credit Suisse and to the turmoil in the sector in the United States.

The agency’s report called continued financial stability in the UK a “global public good” and recommended evidence-based reforms for London that address the post-pandemic rise in employment inactivity, regulatory uncertainty around business investment, and accelerate the country’s green transition.

A note on Tuesday provided a more positive development for the UK compared to the agency’s April World Economic Outlook. Forecasts from the previous month indicated that growth in the UK would contract by 0.3% in 2023, making it the worst performer in the G20. The latest release indicates that growth in the UK will now come in at 0.4% this year – an upgrade of 0.7 percentage points from the previous forecast.

The International Monetary Fund maintains that the UK’s GDP is likely to grow by 1% in 2024, and then by about 2% in 2025 and 2026.

Although somewhat pessimistic, recent reports have been more benign than the IMF’s September statement, when the organization suggested that new measures put in place by the newly elected British government are “likely to increase inequality”. Many of these economic measures were then rescinded, with then-Prime Minister Liz Truss leaving office within 44 days of taking office.