UK set to fall short in 2023 economic growth, IMF says

Indian Prime Minister, Narendra Modi, is in Europe for a vital three-nation trip – a first since COVID restrictions began. This series of discussions held in Germany, France and Denmark, will heavily focus on several post-pandemic issues, namely the importance of strengthening cross-border cooperation to assist with economic recovery across these nations.

This visit comes after India and the EU’s recent announcement to hold an initial round of negotiations on a Free Trade Agreement in June, with the aim of concluding an FTA by the end of 2023 to early 2024. In addition, the two sides have established a trade and technology council which will allow India and the EU to address challenges in trade, trusted technology and security. Currently the US is the only other country to hold a similar agreement with the EU – demonstrating that world leaders are already taking notice of India’s untapped potential.

With the International Monetary Fund’s (IMF) recent projections revealing that the UK will be the worst-performing G7 economy next year – behind the likes of Japan, Germany, France, Italy and Canada – Prime Minister Boris Johnson has repeatedly stated the importance of strengthening international ties. The IMF has also predicted that UK inflation is set to be higher than any other G7 member, while unemployment is likely to rise to 4.6% after hitting a multi-decade low of 3.8% at the start of the year.

The IMF projections display an increasing sense of urgency for the UK to look towards solidifying a Free Trade Agreement (FTA) with the sixth largest economy. With a young and dynamic population of 1.39 billion people, India is currently the hub of skilled workers. The UK has already tapped into this talent pool to assist with the current skills shortage – with 43% of skilled workers entering the UK last year being Indian nationals.

The EU is India’s third-largest trading partner and accounts for €62.8 billion ($67.8 billion) worth of trade in goods. In tandem, British trade with India is worth around £24 billion ($29.93 billion); however, an expedition of an FTA could strengthen it further as UK exports could increase by up to £16.7 billion by 2035.

A cost-of-living crisis unparalleled to any other generation coupled with the outbreak of war has completely derailed the UK’s road to recovery following the pandemic. Experts have stated the crucial need to look towards India’s powerhouse economy to not only boost growth, but also to curb the rising unemployment rates in the UK. Currently, India supports more than half a million jobs across the UK – providing great building blocks for the future.

Nayan Gala, founder of JPIN, comments on the potential FTA and how this could change the IMF’s bleak projections:

“India is one of the world’s largest economies and presents huge potential as a key partner for trade and investment for the UK. India is a 21st century powerhouse and creating a strong UK-India trading relationship will help to fuel economic growth post-Brexit, whilst helping to recover from one of the UK’s most severe cost-of-living crises to date.

“It’s great to see that the EU has taken notice of India’s booming economy. Now, the UK need to move swiftly to solidify a trade agreement with India; this could really allow the UK to benefit from the immense growth India is already experiencing. Although current projections suggest the deal could be worth £28 billion by 2035, I see the potential as being much higher.

“A trade deal will open the door to 1.3 billion potential customers for UK businesses, and provide opportunities for business improvement, consolidation, foreign expansion and diversification in a rapidly growing market. India is a top priority for good reason – it is goods and resource-wealthy, growing exponentially, and will be the centre of world trade in the coming decades. Therefore, building a trading relationship here is particularly important for the UK.”