Economy Rebounds Amid Growing Inflation

26th February 2022

A report on the UK economy by the International Monetary fund(IMF).

Thanks to a rapid vaccination campaign and highly accommodative policies, the United Kingdom's economic recovery has proceeded faster than expected and the near-term growth outlook remains strong, says the IMF European Department's UK Team in a new Country Focus article.

However, the authors say that inflationary pressures are strong, too, and monetary policy will need to tighten steadily to anchor inflation expectations and bring inflation back to target. "Careful communication to counter expectations of a long cycle of rate hikes and high borrowing costs would help reduce the drag on growth in 2023. Fiscal policy could support this tightening cycle if planned consolidation was brought forward slightly."

--Structural Challenges: Despite the recovery, the pandemic and Brexit have magnified structural challenges and will leave some scars. The government has made significant progress in spelling out a comprehensive Plan for Growth, but structural issues such as regional inequality will require additional investment in transport infrastructure and digital connectivity.

Read the Article IV report, and the Financial System Stability Assessment, which says that governance of financial globalization in one of the largest and most complex financial centers in the world will become a bigger challenge post-Brexit.

Read the articles HERE
Note
The articles are highly detailed Pdf files each running to over 100 pages.