The International Monetary Fund (IMF) has warned that the UK faces the slowest rate of growth in the G7 next year.

The IMF predicts that UK economic growth will fall to 0.5% in 2023, which is considerably lower than its previous prediction of 1.2%, which was forecast in April.

Russia's invasion of Ukraine and the Covid-19 pandemic has caused the global economy to shrink, the IMF stated. It has consequently cut its 2022 global growth forecast to 3.2%.

It also said that rising prices and higher borrowing costs are continuing to squeeze households and businesses around the world. The data revealed that in the three months to July, global economic growth contracted, marking the first decline since the onset of the pandemic.

The IMF predicts a 15% probability of recessions in the G7 economies, which include Germany, France, the US, the UK, Japan, Canada and Italy. This is almost four times higher than usual, according to the IMF.

Pierre-Olivier Gourinchas, Economic Counsellor and the Director of Research at the IMF, said:

‘The global economy, still reeling from the pandemic and Russia’s invasion of Ukraine, is facing an increasingly gloomy and uncertain outlook.

‘Higher-than-expected inflation, especially in the United States and major European economies, is triggering a tightening of global financial conditions. China’s slowdown has been worse than anticipated amid Covid-19 outbreaks and lockdowns, and there have been further negative spillovers from the war in Ukraine. As a result, global output contracted in the second quarter of this year.

‘The outlook has darkened significantly since April. The world may soon be teetering on the edge of a global recession, only two years after the last one. Multilateral cooperation will be key in many areas, from climate transition and pandemic preparedness to food security and debt distress.’