London, Europe Brief News – The war in Ukraine will “severely set back” the global economic recovery, with the UK hit harder than most, the International Monetary Fund has said.
The conflict is driving up prices for food and fuel which the international body expects to slow growth globally.
It has cut its global forecast and also downgraded its outlook for the UK.
This means the UK will no longer be the fastest growing economy in the G7 group of leading Western nations, and will be the slowest in 2023, it says.
The body says that UK growth will slow as price pressures lead households to cut spending, while rising interest rates are expected to “cool investment”.
The UK’s economy is now predicted to grow by 3.7% this year, down from the previous forecast of 4.7% made in January.
However, next year, the UK is expected to have the slowest growth in the G7 and across Europe’s main economies, at just 1.2%, a near halving from the 2.3% expected previously. The 2023 UK figure is the slowest apart from heavily-sanctioned Russia in the wider G20 grouping, which includes nations such as China and India.
The price of oil has risen by more than 70% over the last 12 months. Barrel of Brent was 45 dollars in June 2017 to nearly 80 dollars in May 2018.
So, after three years of low prices, crude oil has returned to levels not seen since late 2014.
A New York Times report on Thursday suggested the EU was edging close to cutting Russian oil imports in a phased manner that will give Germany and others time to line up alternative suppliers for their energy needs.
Russia’s oil supply is expected to decline further amid sanctions by the US and its allies as Moscow continues its military offensive in Ukraine, according to the International Energy Agency (IEA). So far in April, about 700,000 barrels per day of production has been shut-in and losses are likely to grow to 1.5 million bpd for the entire month.
From May onwards, close to 3 million bpd of Russian production could be offline due to international sanctions. Widening customer-driven embargo comes into full force, the IEA said on Wednesday.
