empty
27.07.2022 01:39 PM
IMF downgrades its rating for the UK

This image is no longer relevant

The International Monetary Fund said the UK will experience the slowest growth next year because of double-digit inflation and rising interest rates. Their latest outlook indicated that the global economy is currently fragile, so sliding into recession is possible. In fact, the FTSE 100 index already shows downside potential.

Accordingly, the IMF downgraded their rating for the UK in both 2022 and 2023, reflecting an increase in the forecast for peak inflation from 7.8% to 10.5%.

This image is no longer relevant

With regards to the battle over the seat of prime minister, Liz Truss accused her rival, Rishi Sunak, of pushing the economy into recession through tax increases. Sunak, meanwhile, accused Truss of planning to spur inflation, even though it is already at a 40-year high of 9.4%.

Sky-high inflation has eaten household incomes, causing poverty and the worst cost-of-living crisis in decades. The IMF said wage increases due to low inflation "undermine household purchasing power" and causes a slowdown in growth.

Bloomberg Economics estimates that the Truss tax cut will add 0.6% to 2023 GDP, pushing the UK's growth rate higher than that of France, Germany, Italy and the US. It would also add 0.4% to inflation, which will cause interest rates to rise by another 0.5%. Markets expect UK rates to hit 3%.

The biggest risks to global growth are inflation and rates, as well as the escalation of the war in Ukraine, which will drive up energy and food prices. A tight labor market will allow workers to earn higher payouts, while higher interest rates could lead countries to shrink.

The IMF has previously said that the UK faces a serious problem on inflation, linked both to high energy prices experienced by Europe and a shortage of jobs.

Andrey Shevchenko,
Analytical expert of InstaForex
© 2007-2025
Select timeframe
5
min
15
min
30
min
1
hour
4
hours
1
day
1
week
Earn on cryptocurrency rate changes with InstaForex
Download MetaTrader 4 and open your first trade
  • Grand Choice
    Contest by
    InstaForex
    InstaForex always strives to help you
    fulfill your biggest dreams.
    JOIN CONTEST

Recommended Stories

100 Days of Trump's Presidency

While the dollar prepares for key economic data that could determine the Federal Reserve's next course of action, Donald Trump reflected on his first 100 days as President

Jakub Novak 13:31 2025-04-30 UTC+2

USD/CAD: The Pair Consolidates Under Pressure

USD/CAD is showing sideways movement, with spot prices currently trading around the 1.3840 level. The decline in crude oil prices to a three-week low, amid concerns that a full-scale trade

Irina Yanina 13:26 2025-04-30 UTC+2

Canadian Dollar Preparing for a Breakout

Retail sales in Canada fell by 0.4% month-over-month in February but rebounded in March with a strong increase of 0.7%. On a year-over-year basis, retail sales declined to 4.7%

Kuvat Raharjo 13:09 2025-04-30 UTC+2

Stable Inflation to Support the Australian Dollar

Inflation in Australia remained steady at 2.4% year-over-year in Q1, defying expectations of a slight slowdown to 2.2%. The quarterly increase of 0.9% also exceeded forecasts, while core inflation slowed

Kuvat Raharjo 13:03 2025-04-30 UTC+2

U.S. GDP and PCE Data Unlikely to Drastically Shift Market Conditions (Possible Resumption of #NDX and #SPX Growth)

Markets are already fatigued by the chaos unfolding in Donald Trump's mind and among his followers. Everything remains extremely unclear, so market participants are now fully focused on today's important

Pati Gani 09:48 2025-04-30 UTC+2

The Market Hears What It Wants to Hear

How far will greed carry the crowd? The late April rally in the S&P 500 somewhat sweetened the bitter pill for Donald Trump. His first 100 days in office have

Marek Petkovich 09:23 2025-04-30 UTC+2

What to Pay Attention to on April 30? A Breakdown of Fundamental Events for Beginners

A considerable number of macroeconomic events are scheduled for Wednesday, but we doubt they will have any meaningful impact on currency pair movements. The market continues to ignore most macroeconomic

Paolo Greco 06:28 2025-04-30 UTC+2

GBP/USD Overview – April 30: The Illusion of U.S. Democracy and Trump's Impeachment

The GBP/USD currency pair saw a slight downward correction after Monday's rise, which came out of nowhere. However, it's difficult to call this minor move a "dollar recovery." The U.S

Paolo Greco 03:29 2025-04-30 UTC+2

EUR/USD Overview – April 30: The Main Mystery of 2025 Revealed

The EUR/USD currency pair continued trading within a narrow range on Tuesday, showing relatively low volatility. In reality, 80 pips per day is not a bad volatility level

Paolo Greco 03:29 2025-04-30 UTC+2

NZD/USD: Bullish Prospects Amid Uncertainty

Although the past week was completely uninformative regarding fundamental indicators, it allowed adjustments to forecasts on economic growth, inflation, and the Reserve Bank of New Zealand's policy strategy based

Kuvat Raharjo 00:43 2025-04-30 UTC+2
Can't speak right now?
Ask your question in the chat.
Widget callback
 

Dear visitor,

Your IP address shows that you are currently located in the USA. If you are a resident of the United States, you are prohibited from using the services of InstaFintech Group including online trading, online transfers, deposit/withdrawal of funds, etc.

If you think you are seeing this message by mistake and your location is not the US, kindly proceed to the website. Otherwise, you must leave the website in order to comply with government restrictions.

Why does your IP address show your location as the USA?

  • - you are using a VPN provided by a hosting company based in the United States;
  • - your IP does not have proper WHOIS records;
  • - an error occurred in the WHOIS geolocation database.

Please confirm whether you are a US resident or not by clicking the relevant button below. If you choose the wrong option, being a US resident, you will not be able to open an account with InstaForex anyway.

We are sorry for any inconvenience caused by this message.