The UK economy will avoid recession in 2023, according to new analysis from the International Monetary Fund (IMF).
After previously projecting that the UK would have the weakest economic growth in the G7, the IMF sharply upgraded its growth forecast on Tuesday (23 May).
It now expects the UK economy to grow by 0.4% in 2023 rather than contracting by 0.3%.
Meanwhile, inflation will fall to 5% by the end of this year, finally hitting the Government's 2% target in 2024. GDP will continue to grow slowly over the next few years, rising by just 1% in 2024 and 2% in 2025 and 2026.
However, IMF managing director Kristalina Georgieva said that while the Government had taken "decisive and responsible steps" in recent months, the outlook for growth remains subdued.
The IMF warned against lowering taxes until it is affordable to do so and said monetary policy must "remain tight" in order to bring down "stubbornly high" inflation.
Commenting on the new growth figures, Chancellor Jeremy Hunt said:
"Today's IMF report credits our action to restore stability and tame inflation. If we stick to the plan, the IMF confirm our long-term growth prospects are stronger than in Germany, France and Italy - but the job is not done yet."
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