German underperformance is no indicator of British excellence, especially considering that Germany is the UK’s second most important trading partner. Economic downturns are contagious, and the idea that the UK will prosper while Europe’s largest economy drags the rest of the pack into recession is highly unlikely, regardless of what the revised IMF forecast says. 

Things look equally bleak on the other side of the Atlantic, and a majority of US economists believe that the United States will enter a recession in the second half of this year — although it remains to be seen how deep and prolonged the downturn will be. But with both the US and Germany facing an economic contraction, one should be sceptical about the UK being the exception which escapes a general negative trend. This is also reflected in polls measuring views in the business world, which remains quite cautious about the larger macroeconomic picture and where confidence is only returning very slowly.

One key element of the more positive IMF prediction is an anticipated prolonged decline in energy prices. This assumption coincides with a warning yesterday by Qatar’s energy minister that the “worst is yet to come” for Europe in the energy sector, and that it was only due to an unusually warm winter that a catastrophe had been delayed. The IMF report also barely touches on the ongoing war in Ukraine, another geopolitical factor that makes all economic forecasts inherently unreliable as things stand.

A cautious observer would assume that the IMF wanted to increase economic confidence through a more upbeat outlook, which is understandable. Yet if experience is any guide, the next revision won’t be far away.