In the News Teaching Activity: IMF Predicts That UK Economy Will Have Highest Inflation and Slowest Growth in the G7 in 2024 (Oct 2023)

The IMF forecasts that the UK’s growth rate for 2024 will be just 0.6%, in part, because higher interest rates are needed to reduce UK inflation. The UK government believes this is too pessimistic and pointed to errors in IMF forecasting in the past. Have a go at this free teaching activity, which includes a downloadable worksheet and suggested answers.

The International Monetary Fund (IMF) rejected the UK government's criticism of its economic assessment, citing the need to maintain high interest rates to curb inflation and warning of a global slowdown, both of which are likely to slow growth.

The UK Treasury argued recent upward growth revisions were not properly considered. However, hot on the heels of the gloomy IMF forecast, the ONS published the GDP data for August, showing 0.2% growth for the month.

The UK now needs robust growth in September to avoid Q3 2023 being in recession territory. The cost-of-living crisis and a weak recovery post-pandemic are contributing to a very sluggish performance in the consumer-facing service sector.

Additionally, some commentators are concerned that the recent hikes in interest rates may still be less than halfway to their full impact due to time lags.

IMF defends gloomy UK forecast after government criticism (BBC News)

Read the article and then answer the following questions.

1. Which countries make up the G7? What is the G7 for?
2. Explain why a global slowdown could contribute to slower growth in an economy such as the UK.
3. Discuss why ‘the recent hikes in interest rates may still be less than halfway to their full impact.’