Britain’s Sunak defends Brexit as outlook dims

A bartender works at a pub in Cambridge on Jan 24. British consumers are battling an escalating cost-of-living crisis. (PHOTO / REUTERS)

LONDON — British Prime Minister Rishi Sunak on Monday defended Brexit, insisting that leaving the European Union had brought significant achievements and offered a "huge opportunity", as the International Monetary Fund slashed the country's growth outlook.

"In the three years since leaving the EU, we've made huge strides in harnessing the freedoms unlocked by Brexit to tackle generational challenges," Sunak said in a statement ahead of Tuesday's three-year anniversary since the country formally left the EU.

He said Brexit was a "huge opportunity to deliver" on his priorities on growth, employment and social mobility.

The prime minister, who will also mark 100 days in office this week, said the United Kingdom had "forged a path as an independent nation with confidence" and "that momentum hasn't slowed".

He said this included Europe's fastest vaccine rollout, trade deals with 70 countries and "taking back control of our borders".

The statement came as Sunak faces numerous challenges, with thousands of UK workers launching waves of strike action over pay outpaced by soaring inflation as the cost of living crisis hits millions.

On Tuesday, British grocery inflation hit a record 16.7 percent in the four weeks to Jan 22, dealing another blow to consumers battling the cost-of-living crisis, industry data showed.

A YouGov poll last week found 63 percent think the government is handling the issue of Brexit badly.

In a jargon-heavy statement, Sunak said progress had been made in "a range of key growth areas".

He cited economic reforms, including the opening of free ports that exist outside normal tax and customs territory, as well as regulatory reforms to the financial sector.

On Tuesday, the IMF said in its forecast that Britain is the only Group of Seven nation to have suffered a cut to its 2023 economic growth outlook, adding pressure on Jeremy Hunt, the chancellor of the exchequer, to come up with a growth plan.

Britain's flagging economy now looks set to shrink by 0.6 percent this year, a sharp downgrade from previously expected growth of 0.3 percent in the IMF's last forecast in October.

All other G7 economies are predicted to grow this year, mostly at a stronger pace than the IMF forecast three months ago.

Multiple pressures

The IMF said Britain would struggle with a combination of factors, including higher taxes announced by Hunt late last year as he tried to restore the confidence of investors after former prime minister Liz Truss' mini-Budget in September.

Britain had also been hit particularly hard by the surge in gas prices amid the Russia-Ukraine conflict as it relied on gas for much of its power generation, and it faced a shortage of workers too that was holding back the economy, the IMF said.

"All these factors taken together lead to a fairly sharp retrenchment of activity in 2023," IMF's chief economist Pierre-Olivier Gourinchas said.

Hunt said nearly all advanced economies were facing headwinds, and that past forecasts from a range of bodies including the IMF had proved too gloomy about Britain's prospects.

Agencies via Xinhua