Chancellor opens IMF Article IV Press Conference
Chancellor opens IMF Article IV Press Conference at HM Treasury on 23 May 2023.
Intro
Thank you, Kristalina, for being here today. It’s a pleasure to welcome you to London for the first in-person Article IV mission since 2018.
I welcome the publication of your statement today, which provides a timely, independent assessment of the UK economy from the IMF.
The backdrop for your visit is one of challenge and opportunity.
Since the Fund’s last assessment of the UK economy in February 2022, our world and our economy has been challenged fundamentally by Putin’s illegal war in Ukraine, and the whole continent is feeling the knock-on effects.
And so since becoming Chancellor, my central mission has been to restore macroeconomic stability and deliver our priorities to halve inflation, grow our economy and get debt falling.
Today, the IMF’s assessment shows that we are on the right track.
Macroeconomic Outlook
Their report forecasts growth of 0.4% in 2023 – a 0.7 percentage point upgrade versus their April forecast.
That is even higher than the Bank of England’s forecast – published last week - for 0.25% growth in 2023.
The IMF say that we have acted decisively to fight inflation, which will “substantially” reduce to around 5% by the end of the year.
And the IMF say that our approach to fiscal policy will help to significantly reduce the deficit over the forecast - by 3% of GDP between 22/23 and 27/28.
Together, these forecasts demonstrate that we are on the right path, but the job is not done yet.
Growth Measures
Growing our economy is one of this government’s top priorities.
I was pleased to see that the IMF agree with the need for “ambitious evidence-based structural reforms” to support growth because that is exactly what we are delivering.
At Spring Budget, I announced measures to grow the economy focusing around four key areas – Employment, Education, Enterprise, and Everywhere.
The OBR judged these policies – including a major expansion of childcare support – will result in 110,000 more individuals in the labour market by 2027-28, directly increasing employment by 0.3% and GDP by 0.2%.
The OBR also say that full expensing would boost business investment by almost 3.5% in 2024-25 and 2025-26.
Today the IMF say that the supply-side measures in the Budget “should have a positive effect on medium-term growth” and we will continue this work in the months ahead.
Fiscal Policy
But despite this positive news, I know that high inflation and energy prices - issues shared internationally - remain key challenges.
People are worried about the cost of living, which is why I announced the extension of the Energy Price Guarantee in the Spring; why we are delivering cost of living payments to more than 7 million households; and why we are freezing fuel duty to keep more money in people’s pockets.
Like the government, the IMF recognise inflation is a major challenge for the UK economy and affirm that we are taking the right strategy to support the Bank of England in their efforts to combat inflation.
And I know the IMF agree that we have among the best macroeconomic institutions and frameworks anywhere in the world to respond to these challenges.
Reducing Uncertainty and Promoting Long-term Growth
Finally, I am pleased the IMF have recognised our work to reduce uncertainty for households and businesses in the face of some of the biggest challenges we face.
That includes agreeing the Windsor Framework which the IMF say will “favourably impact business investment” …
… setting the conditions for long-term growth, with world-leading ambitions and legal frameworks for our net-zero goals…
… and ensuring that our banking sector remains well capitalised and resilient to shocks.
Final Remarks
We are working hard every day to grow our economy and deliver on this government’s priorities, and the IMF today show we are doing just that.
Thank you, Kristalina, to you and your team for your work.
I will now hand over to you.