According to the IMF, Britain’s economic growth is worse than Russia’s. But can this really be true?
In its April World Economic Outlook, it revised its economic forecast upwards for the UK but still predicted that it would have the worst performing economy in the G7 group of nations, with its economy shrinking by 0.3 percent.
Meanwhile Russia’s economy is forecast to grow by 0.7 percent despite being hit by tough economic sanctions.
But there was scepticism from some commentators about the reliability of the IMF prediction of growth in the Russian economy.
“Do I believe the Russian economy is worse than the British one? No” Paul Johnson told i. “Russian data is very difficult to come by and compare properly. If you put the past two years together, Russia has done worse, but has regained a bit of ground.”
Maxwell Marlow, spokesperson for the Adam Smith Institute said: “Regarding the Russian ranking for growth, their statistical alchemy, which can be seen from their fib-filled propaganda for their war in Ukraine, should be taken with a mountain of salt.
“An unprecedented sanctions regime, their largest brain drain since the 1950s, export substitution for their most lucrative markets in energy and minerals, and staggering inflation, all shows that the Russian state-of-affairs will continue to fall behind already faltering economies, such as the British.”
There was agreement that the UK economy was not in the best place, however. Dominic Caddick, at the New Economics Foundation noted that even though the IMF revised its estimates for the UK up by 0.3 percent, it still puts the UK at the bottom of the pack for the advanced G7 economies.
He said: “The UK has struggled with high inflation because of the impact of Brexit on import prices, and our high reliance on fossil fuels. This has left us vulnerable to rising prices stemming from Russia’s invasion of Ukraine. None of this was inevitable. But there’s still time to invest in our economy and increase incomes to combat the sky-high cost of living. If we want to avoid a recession, we should be taking lessons in global leadership from our American peers, and massively invest in green infrastructure while creating new and well-paid jobs.”
The Adam Smith Institute also pointed to a broken housing market curtailing productivity and living standards, while a lack of upskilling and training continue to push the UK’s wider innovative areas behind our peers.
A spokesperson said: “The Chancellor could opt to slash red-tape, including our 20,000 page tax-book and mammoth legal and regulatory requirements for building and development which cripple any hopes of growing the economy through investment, internal and external. Likewise, our tax burden, which is at post- WW2 levels, continues to crater our competitiveness in salary offerings for skilled immigration, meaning that any shortages we have developed since the pandemic cannot be filled.”
But can the performance of the UK and Russian economies be usefully compared? The UK is the fifth largest economy in the world, whereas Russia has a smaller economy than that of Italy.
Caddick said that the UK and Russia had been exposed to different shocks and the IMF’s forecast that Russia would grow while the UK shrinks was a reflection that the UK’s response to the cost of living crisis has been particularly lacking.
But he cautioned that GDP is not a perfect measure and did not necessarily measure people’s quality of life.
Caddick added: “GDP figures will include military spending which will boost Russia’s stats while excluding measures of wealth inequality which hides deeper issues in the UK.”
