Brexit 'driving the desire' for IndyRef2 says Stephen Gethins

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The International Monetary Fund warned on Tuesday that colliding pressures from inflation, war-driven energy and food crises and sharply higher interest rates were pushing the world to the brink of recession and threatening financial market stability.

In gloomy reports issued at the start of the first in-person IMF and World Bank annual meetings in three years, the IMF urged central banks to keep up their fight against inflation despite the pain caused by monetary tightening and the rise in the US dollar to a two-decade high, the two main drivers of a recent bout of financial market volatility.

Cutting its 2023 global growth forecasts further, the IMF said in its World Economic Outlook that countries representing a third of world output could be in recession next year.

“The three largest economies, the United States, China and the euro area, will continue to stall,” Pierre-Olivier Gourinchas, the IMF’s chief economist, said in a statement. “In short, the worst is yet to come, and for many people, 2023 will feel like a recession.”

The IMF said Global GDP growth next year will slow to 2.7 percent, compared, down from its July forecast of 2.9 percent, as higher interest rates slow the US economy, Europe struggles with spiking gas prices and China contends with continued COVID-19 lockdowns and a weakening property sector.

The global lender maintained its 2022 growth forecast at 3.2 percent, reflecting stronger-than-expected output in Europe but a weaker performance in the United States, after torrid 6.0 percent global growth last year as the COVID-19 pandemic eased.

Some key European economies will fall into “technical recession” next year, including Germany and Italy, as energy price spikes and shortages slam output. China’s growth outlooks also were downgraded as it struggles with continued COVID-19 lockdowns and a weakening property sector, where a deeper downturn would slow growth further, the IMF said.

The growing economic pressures, coupled with tightening liquidity, stubborn inflation and lingering financial vulnerabilities, are increasing the risks of disorderly asset repricings and financial market contagions, the IMF said in its Global Financial Stability Report.

But despite the gloomy global forecast, data still shows Brexit Britain will grow faster than its European counterparts.

The forward-looking policy approved by the United Kingdom, which led to the implementation of Brexit, has allowed guarantees that favour business and investment capacity and agility.

Those who attacked figures like that of Boris Johnson yesterday and today do the same with Prime Minister Liz Truss, will necessarily have to change their mind: net of the positive or negative considerations that can be advanced on individual UK governments, one must recognise the skill of the top management in Downing Street to extricate itself through the major national economic and political difficulties, maintaining firm cornerstones that are beneficial in the long term.

Despite the political rift relating to future relations between England and Scotland, as well as the dossier of the Northern Irish protocol destined to explode in the near future, the UK manages to unite in the face of the principles of management of society and politics.

A useful quality that the data recognise and attest even in the most complex moments of crisis, refuting the Eurolyric mainstream narrative that presented Great Britain as a nation destined to fail after leaving the European Union.

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“It’s difficult to think of a time where uncertainty was so high,” Tobias Adrian, the IMF’s monetary and capital markets director, told Reuters in an interview. “We have to go back decades to see so much conflict in the world, and at the same time inflation is extremely high.”

The IMF said central bankers had a delicate balancing act to fight inflation without over-tightening, which could push the global economy into an “unnecessarily severe recession” and heap economic pain on emerging markets that are seeing their currencies fall sharply against the dollar.

But Pierre-Olivier Gourinchas, the IMF’s chief economist, said controlling inflation was the bigger priority and letting up too soon would undermine central banks’ “hard-won credibility.”

“What we are recommending is that central banks stay the course. Now that doesn’t mean that they should accelerate compared to what they’ve been doing,” Mr Gourinchas said in a news conference, adding that it was “a bit early” to shift course.

“I think right now our advice is, ‘let’s make sure we see a decisive decline in inflation.'” The IMF forecast that global headline consumer price inflation would peak at 9.5 percent in the third quarter of 2022, declining to 4.7 percent by the fourth quarter of 2023.

But the outlook could darken considerably if the world economy is hit by a “plausible combination of shocks,” including a 30 percent spike in oil prices from current levels, the IMF said, pushing global growth down to 1.0 percent next year – a level associated with widely falling real incomes.

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