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IMF World Economic Outlook upgrades UK growth forecast for 2024

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Seen through the branches of trees in Ruskin Park are the lit porches of terraced period homes and in the distance, the growing development at Nine Elms, on 14th May 2024, in London, England. 

Richard Baker | In Pictures | Getty Images

LONDON — The International Monetary Fund on Tuesday lifted its 2024 growth outlook for the U.K. to 0.7% from 0.5%, providing a further boost to the country’s new government.

Looking ahead, the Washington, D.C.-based IMF reiterated its forecast for 1.5% U.K. growth in 2025 in the July update of its World Economic Outlook.

The upgrades come after two years of stagnation, with the U.K. falling into a shallow recession in the second half of 2023. However, GDP growth in May came in above analyst expectations at 0.4%, while summer events including the Euro 2024 soccer championship and even Taylor Swift’s Eras Tour are expected to bolster economic activity.

Investment bank Goldman Sachs earlier this month nudged its 2025 forecast for the U.K. economy 0.1 percentage point higher, to 1.6%. It cited the fiscal plans of the new Labour government led by Prime Minister Keir Starmer, which include planning reform and closer trade ties with the European Union.

Deutsche Bank on Friday joined Goldman in brightening its U.K. outlook, with economists saying in a note they now expect gross domestic product growth of 1.2% this year, well above their earlier 0.8% forecast.

The country’s GDP in May showed the strength of sectors across professional services and construction, Deutsche Bank said, with the Euros tournament expected to provide a further boost to hospitality and leisure.

Analysts at Jefferies, meanwhile, said in a recent note that the size of Labour’s parliamentary majority would make the U.K. appear “relatively stable,” and that in tandem with regulatory reform may raise the attractiveness of assets in the country.

It comes as the Bank of England is expected to start bringing down interest rates in the coming months. U.K. inflation hit the central bank’s 2% target in May, and economists polled by Reuters see it declining further to 1.9% in Wednesday’s print.

Other economies given a 2024 growth upgrade by the IMF on Tuesday included the euro zone, which it lifted by 0.1 percentage point to 0.9%, Spain, up 0.5 percentage point to 2.4%, and China, up 0.4 percentage point to 5%.

It lowered its forecast for the U.S. economy by 0.1 percentage point to 2.6%.

The organization sees worldwide growth at 3.2% this year, and said global activity and world trade were firmer, particularly due to strong exports from Asia.

However, it warned that the services sector was broadly holding up the disinflation process, complicating monetary policy decisions.

“Upside risks to inflation have thus increased, raising the prospect of higher-for-even-longer interest rates, in the context of escalating trade tensions and increased policy uncertainty,” the IMF said in the World Economic Outlook.

— CNBC’s Sophie Kiderlin and Vicky McKeever contributed.

Economics

Trump tariffs could cause summer economic slump: Chicago Fed president

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Austan Goolsbee, President and CEO of the Federal Reserve Bank of Chicago, speaks to the Economic Club of New York in New York City, U.S., April 10, 2025. 

Brendan McDermid | Reuters

Business owners and CEOs are already stocking up on inventory, and some American shoppers are panic buying big-ticket items in anticipation of President Donald Trump’s tariffs. The sudden buying binge could cause an “artificially high” level of economic activity, said Federal Reserve Bank of Chicago President Austan Goolsbee.

“That kind of preemptive purchasing is probably even more pronounced on the business side,” Goolsbee told CBS’ “Face The Nation” on Sunday, adding: “We heard a lot about preemptive building-up of inventories that could last 60 days, 90 days, if there [was] going to be more uncertainty.”

Businesses stockpiling inventory and consumers accelerating their purchasing decisions — buying an Apple iPhone now, say, rather than waiting until the fall — may inflate U.S. economic activity in April and lead to a slowdown in the coming months, Goolsbee suggested.

“Activity might look artificially high in the initial, and then by the summer, might fall off — because people have bought it all,” he said.

Sectors affected by Trump’s tariffs, particularly the auto industry, are most likely to heavily stock up on inventory now before import levies on goods from other countries potentially rise further, said Goolsbee. Many car parts, electronic components and other big-ticket consumer items are manufactured in China, for example, which currently faces a 145% total tariff rate on goods imported to the United States.

Trump’s tariffs on a bevy of other countries are currently in the middle of a 90-day pause, with a 10% baseline tariff rate instead applying to all imported goods across the board. The pause is due to expire on July 9, with Trump touting a series of rate negotiations with foreign leaders between now and then.

“We don’t know, 90 days from now, when they’ve revisited the tariffs, we don’t know how big they’re going to be,” Goolsbee said.

Some U.S. business owners who buy goods manufactured in China say they already can’t afford to place rush orders on inventory. Matt Rollens, owner and CEO of Granite Bay, California-based novelty drinkware company Dragon Glassware, says he’s temporarily holding his products in China because paying the 145% levy would force him to raise consumer prices by at least 50%, likely drying up customer demand.

Rollens has enough inventory in the U.S. to last roughly until June, and hopes the tariffs will be rolled back by then, he told CNBC Make It on April 11.

Short-term uncertainty and financial pain aside, the Fed’s Goolsbee expressed optimism about the country’s longer-term economic outlook.

“If we can get through this, it’s important to remember: The hard data coming into April was pretty good. The unemployment rate [was] around steady full employment, inflation [was] coming down,” he said. “It’s just a desire of people expressing they don’t want to back to ’21 and ’22, at a time when inflation was really raging out of control.”

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Economics

Donald Trump wants a certain kind of immigrant: the uber-rich

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IN HIS LOVE of lucre Donald Trump can be crass. In their pursuit of efficiency, free marketeers can be, too. Consider the sale of citizenship. Most people dislike the idea of treating national belonging as a commodity. Yet about a dozen countries hawk passports and more than 60, including America, offer residency in exchange for an investment or donation. Its “golden-visa” scheme is cumbersome, under-priced and inefficient. On this point the president and the market agree.

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Checks and Balance newsletter: The Democrats’ future is up for grabs

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Checks and Balance newsletter: The Democrats’ future is up for grabs

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