In its annual report on the condition of the British economy, the Washington-based Fund warned of a black hole in the public finances, requiring £30 billion in spending cutbacks or tax increases to stabilise the national debt.
The fund increased its prediction for GDP growth this year from 0.5% to 0.7%, stating that “the UK economy is approaching a soft landing, with a recovery in growth expected in 2024, strengthening in 2025.”
It now forecasts inflation to fall to around 2% in the coming months, with the Bank of England cutting interest rates by up to three-quarters of a percent this year and another percentage point next year.
The chancellor praised the fund’s article IV report, saying: “Today’s report clearly shows that independent international economists agree that the UK economy has turned a corner and is on track for a soft landing.”
