THE International Monetary Fund (IMF) has upgraded its forecast for the UK economy this year and next, but still expects it to grow slower than other Group of Seven (G7) countries.

UK output is expected to contract by 0.3% this year before rebounding to grow by 1% next year, economists working for the body said.

It puts the UK firmly at the bottom in the G7 group of advanced economies this year. The only other economy that the IMF expects to decline is Germany’s, which is expected to contract by 0.1%.

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But it is at least better news than a previous IMF forecast, which predicted that the economy would shrink by 0.6% this year.

The group singled out the UK and parts of Europe as the places which will struggle over the coming years.

“Notably, emerging market and developing economies are already powering ahead in many cases, with growth rates (fourth quarter over fourth quarter) jumping from 2.8% in 2022 to 4.5% this year,” it said.

“The slowdown is concentrated in advanced economies, especially the euro area and the United Kingdom.”

SNP Economy spokesperson Stewart Hosie MP said it is clear why Scotland needs to become independent off the back of this news.

Hosie said: "The future for Scotland under Westminster control looks bleak as the UK is set to be the worst performing economy in the G20. It is clear why Scotland needs to escape the chaos of Westminster and become an independent country.

"This dismal performance is due to nothing more than Tory economic incompetence and their disastrous Brexit. They are taking the UK economy into a tailspin and Scotland is being dragged along for the ride.

"There is no hope for an upturn in fortunes under a pro-Brexit Labour government either who will keep Scotland outside the European Union no matter the economic consequences. That's despite the EU single market being seven times the size of the UK's.

"The only way for Scotland to begin to flourish is by becoming an independent country and re-join the European Union."

Next year is more of a mixed bag for the UK. Output is expected to rise by 1%. It puts the UK towards the bottom of the G7 yet again, tied with Japan and slightly ahead of Italy, which is set to grow by 0.8%.

The economists also warned of further problems in the months ahead, even following the recent chaos in the banking sector which saw several US banks go out of business and Credit Suisse bought by rival UBS.

“Below the surface, however, turbulence is building, and the situation is quite fragile, as the recent bout of banking instability reminded us,” the IMF said.

“Inflation is much stickier than anticipated even a few months ago. While global inflation has declined, that reflects mostly the sharp reversal in energy and food prices.

“But core inflation, excluding the volatile energy and food components, has not yet peaked in many countries.”

In the UK inflation is expected to fall from 9.1% last year to 6.8% this year and 3% in 2024.