New fears Brexit has ‘drained life out of UK economy’ following IMF report

The International Monetary Fund’s July report warns ‘the global economy is in a sticky spot’ with the UK lagging behind most other major economies

Opponents of Brexit have warned that the latest figures from the International Monetary Fund (IMF) confirm that leaving the EU “has drained the life out of the British economy”.

The claims come as Sir Keir Starmer’s Labour government begins a reset of the UK’s relationship with the EU following their victory in the general election.

The prime minister is set to host European leaders at the European Political Council at Blenheim Palace on Thursday just days after his new EU relations minister Nick Thomas-Symonds went to Brussels to start talks on a new Brexit deal.

But the urgency of the problem appears to have been highlighted in the latest IMF projections.

The Labour government is seeking to reset relations with the European Union (PA)

According to the IMF, the UK only grew 0.1 per cent in 2023, and will only grow by 0.7 per cent by the end of this year. While growth is set to double next year, it will still only hit 1.5 per cent.

The figures put the UK behind the average for advanced economies which are set to grow by 1.8 per cent, while the worldwide average will be 3.2 per cent.

Spain is set to be the highest performer in the Euro area, with growth of 2.1 per cent.

Critics say that the UK’s continued sluggish performance is proof that Brexit continues to hold the economy back.

Dr Mike Galsworthy, chair of European Movement UK, said: “The IMF projections for the UK make for grim reading, and should concern us all.

“Most of us have felt the effects of a badly performing economy over the past few years, impacting our weekly shopping, work opportunities, public services, and quality of life.

“Cutting off our relationship with the EU has simply drained the life out of the country. Fortunately, none of this is irreversible, and it’s now time for realistic appraisals under a new government which recognises that we urgently need a new, grown-up relationship with the European Union.”

The IMF report, entitled The Global Economy in a Sticky Spot, blames the aftermath of dealing with inflationary pressures and continued war in Ukraine and the Middle East for its gloomy prognosis.

The report noted: “IMF staff projections are based on upward revisions to commodity prices, including a rise in nonfuel prices by 5 per cent in 2024.

“Energy commodity prices are expected to fall by about 4.6 per cent in 2024, less than projected in the April WEO, reflecting elevated oil prices from deep cuts by OPEC+ [the Organization of the Petroleum Exporting Countries, including Russia and other non-OPEC oil exporters] and reduced, but still present, price pressure from the Middle East conflict.

“Monetary policy rates of major central banks are still expected to decline in the second half of 2024, with divergence in the pace of normalization reflecting varied inflation circumstances.”

This article was amended on 23 July 2024. It previously stated that Germany was set to be the highest performer in the Euro area, with growth of 1.7 per cent, but that was inaccurate. Spain is set to be the highest performer, with growth of 2.1 per cent.