This podcast is owned and originally published by BBC Radio 5 Live – Wake Up to Money: https:\/\/www.bbc.co.uk\/programmes\/m001hn77<\/a><\/em><\/p>\n\n\n\n

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BBC<\/strong><\/p>\n\n\n\n

BBC Sound Music Radio Podcasts wake up to Money from BBC Five Live hello, welcome to Wake Up to Money, where the International Monetary Fund has given its assessment on the global economy. On the British economy. It’s not great news for the UK, lagging behind its peers, the IMF says, set to be the only country of a group of advanced economies to shrink this year. We’ll have a look at the detail on that.<\/p>\n\n\n\n

BBC<\/strong><\/p>\n\n\n\n

Have a look at this breaking news this morning. First, though, just in the last few hours, we’ve got this detail from the International Monetary Fund, this global financial body that over the years, we’ve talked about the IMF bailing out certain countries that are in financial disarray, puts out its advice and its forecasts and analysis about global economies all the time. Its sort of aim is to try and have a bit of economic stability globally. And so it has its world economic outlook, which is closely looked at every three months it forecasts growth, it looks at how countries have been performing. Its forecast for growth in 2023 have actually been revised upward slightly around the world for every major, what we call G7 economies as well, these advanced economies, often those leaders of those G7 countries get round the table, don’t they, and have conversations and try to come to agreements about things.<\/p>\n\n\n\n

BBC<\/strong><\/p>\n\n\n\n

Every country in that group has had its forecasts uplifted for 2023, except the UK. It had previously forecast a bit of growth for the UK, but now sees our economy shrinking by 9.6% in 2023. Despite this, the chief economist at the IMF has said that the Treasury’s policies are on the right track. It’s not just, of course, about forecast for the year ahead. Just seeing front page of the Guardian this morning, where this story makes the headlines there. They highlight that last year in 2022, the UK economy actually grew more strongly than the IMF predicted. So we grew up 4.1% over the year than the 3.6% it had been predicting just three months ago. We got Tony Nash with me. Chief economist at Complete Intelligence, based in Houston in Texas. Tony, thank you so much for being with us this morning. Good morning to UK time. Good morning.<\/p>\n\n\n\n

BBC<\/strong><\/p>\n\n\n\n

Tony, let’s talk globally first about the IMF’s views on the world economy. Why has it changed its thinking so much since just a few months ago?<\/p>\n\n\n\n

Tony<\/strong><\/p>\n\n\n\n

Yeah, there’s a view from the IMF that inflation has really turned over, that we’ve crested with inflation and things are starting on the downside. I guess the caution that I would put on that view is that goods inflation has likely peaked, but services inflation with wages rising still, we’re not necessarily out of the woods yet with services inflation. So I think there are a few more headwinds in some of these economies than the IMF has really thought through.<\/p>\n\n\n\n

BBC<\/strong><\/p>\n\n\n\n

And when you look at effectively the rankings that the IMF put out there in terms of who’s growing, how quickly, who’s bouncing back stronger from the depths of pandemic, all of that kind of thing. Where does the UK rank in that now when you look at those tables?<\/p>\n\n\n\n

Tony<\/strong><\/p>\n\n\n\n

Yeah, well, I think the IMF generally, they got the US right. They’re right on our forecast<\/a>. Asia, they’re about right with China coming, with China opening up<\/a>. I think Europe, they’re a little overly optimistic on the EU and I think the UK, they’re a little overly pessimistic on the UK. It’s a tough environment in the UK, very tough politically. Inflation and wages are serious pressures on everyone. But I do think that this IMF report for the UK, I believe, has relied heavily on the Bank of England’s assessment of the economy in November, which the bank has said that they were overly negative in that assessment and that they’ll likely upgrade their view in their next meeting. So I believe that this IMF report relied on that assessment from the Bank of England.<\/p>\n\n\n\n

BBC<\/strong><\/p>\n\n\n\n

Which is why it’s always important to see how these forecasts actually play out at the end of the day. We’ll know that in about a year’s time.<\/p>\n\n\n\n

BBC<\/strong><\/p>\n\n\n\n

Tony, just the mood generally of investment from businesses, from governments around the world and consumer confidence, our keenness to spend, do you notice that changing in different parts of the world now, compared to how you might have thought we were all behaving a few months ago?<\/p>\n\n\n\n

Tony<\/strong><\/p>\n\n\n\n

Oh, absolutely. I think with interest rates rising, I think people are thinking twice, businesses are definitely thinking twice before making investments and before spending money. The UK has been a country in Europe that has not invested as much in terms of capital investment as other countries in Europe. And so I think this is probably hitting British companies harder because they haven’t invested in the fixed assets that they’ve needed over the last several years. And now when they need the production capacity, because typically investment equates to production capacity, if they haven’t made those investments with low interest rates over the past several years, it’s going to be even harder to make those investments with higher interest rates, so they have to pay more for people. So that’s the real dilemma that I think we’re seeing, especially in UK business trade offs.<\/p>\n\n\n\n

BBC<\/strong><\/p>\n\n\n\n

Tony, thanks so much for the snap analysis there on that report coming from the International Monetary Fund. Tony Nash, chief economist at Complete Intelligence. In Houston. In Texas.<\/p>\n","protected":false},"excerpt":{"rendered":"

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