Andrew Marr: 'Could the IMF's bleak report on state of UK economy spell the return of Liz Truss?'
31 January 2023, 18:21
The International Monetary Fund's "bleak" prediction that the UK will have the weakest major economy in the world and become the only G7 nation to shrink could spell the return of Liz Truss and her allies, Andrew Marr has said.
Liz Truss was forced to resign as prime minister after just 45 days in the job as her 'growth, growth, and growth'-inspired mini-budget, which included tax cuts, crashed the pound and sent household costs soaring.
New PM Rishi Sunak and his Chancellor Jeremy Hunt have since reversed a number of Ms Truss' policies, including the decision to cut taxes.
Speaking on LBC's Tonight With Andrew Marr on Tuesday, the presenter said the IMF's assertion that Britain's under-performing economy has been caused by "tighter fiscal and monetary policies and financial conditions” could leave some sections of the Conservative party feeling vindicated.
Andrew said: "It's only a forecast. Economists get lots of things wrong. Real life is endlessly surprising.
"But make no mistake, today's forecast from the IMF that the UK will be the world's worst performing big economy this year - yes, worse even than sanctions-hit Russia - and the only one to actually get smaller, was bleak news.
"What’s to blame? The IMF says our under-performance has been caused by "tighter fiscal and monetary policies and financial conditions” as well as high energy prices."
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Andrew continued: "For many Tory MPs, coming ahead of the Budget next month, all of this is proof that the chancellor, Jeremy Hunt, must now cut taxes.
"There's no sign he will. The plan is the plan: Getting inflation down will, in his view, be just as important or more so, than hard-pay-for tax cuts.
"So we must hang on. Keep on keeping on - hold our nerve."
Andrew continued: "But what about that terrible scorecard from the IMF? The tax cutters haven’t given up. Liz Truss and her allies are tip-toeing back into the cold winter sunlight.
"For them, next year's budget will be too late, too close to the election to be effective. I expect to hear apologies from them – we moved too fast, the footwork wasn't brilliant – but alongside the central claim that their direction of travel was right.
"And they’ve got media backers: the Daily Mail translated the IMF forecast into a front page headline reading: 'Why we have to cut taxes and go for growth.'
"As the song has it, there may be trouble ahead. Inside the Conservative Party I can see a collision coming."
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Britain's economy will slam into reverse as the cost of living crisis hits households hard, the IMF has warned.
It will fall behind the likes of Russia as soaring inflation and higher interest rates take their toll, according to the latest World Economic Outlook update.
The IMF predicted a GDP contraction of 0.6% against the 0.3% growth pencilled in last October.But it nudged up its outlook for UK growth in 2024 to 0.9%, up from the 0.6% expansion previously forecast.
The grim outlook also puts the UK far behind its counterparts in the G7 group of advanced nations, with it becoming the only country - across advanced and emerging economies - expected by the IMF to suffer a year of declining GDP.
Among the other G7 nations, the IMF's 2023 GDP predictions show growth of 1.4% in the United States, 0.1% in Germany, 0.7% in France, 0.6% in Italy, 1.8% in Japan and 1.5% in Canada.
It comes against a backdrop of public sector strikes over pay and predictions that the UK is heading for a recession, with inflation still standing at more than 10%.
