The United Kingdom emerges at the bottom of the G7 economies in terms of growth, according to a forecast by the international monetary fund. The estimates also revealed that the U.K. is the worst-performing country of G20 nations following the COVID-19 pandemic, as the economy is expected to shrink by 0.3 percent in 2023. Chile, Colombia, Costa Rica, Latvia, Lithuania, and Switzerland were among other countries also predicted to show declines.
According to Organisation for Economic Co-operation and Development (OECD), the number of working-age adults employed or looking for jobs is less than that of the pre-pandemic era, recording a decline from 79.5 percent in 2019 to 78.6 percent at the end of 2022. Moreover, employers are struggling to fill vacancies, given the rise in economic inactivity. According to reports, about half a million more people are leaving full-time jobs for health reasons. Other causes for the increase in unemployed workers include early retirees and a lack of incentives at work.
According to Andy Haldane, former Bank of England chief economist, the lack of investments in health and social sectors has also contributed to the downfall.
In a speech at Bloomberg, Chancellor Jeremy Hunt encouraged early retirees and those unemployed to rejoin the workforce. He also announced tax cuts on pensions and increased funding for childcare in the previous month's budget to make it easier for people to return to the job market. “We need you, and we will look at the conditions necessary to make it worthwhile,” he said.
“We are entering a perilous phase during which economic growth remains low by historical standards, and financial risks have risen, yet inflation has not yet decisively turned the corner,” said Chief Economist Pierre-Olivier Gourichas. He cited the collapse of the Silicon Valley Bank in the UK and Credit Suisse in Europe as disruptors of the economy, along with high gas prices and slow trade caused by the Ukraine war. “Inflation is much stickier than anticipated even a few months ago,” he stated.
The IMF has reduced its predictions for global growth this year, noting that the fund is at its weakest level since the forecast in 1990. Accordingly, global economic growth will decline before increasing gradually, settling at 3 percent from 2.8 percent in 2028.
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