Despite the beginning of H1 this year being a turbulent time for the global investment ecosystem, the IMF has announced that the UK is expected to avoid a recession in 2023. The slowdown at the beginning of this year was widely attributed to various macroeconomic factors, such as the war in Ukraine, and inflationary pressures, increasing interest rates. However, in light of a significant fall in inflation and the IMF’s latest prediction, Claire Trachet, investment expert and CEO and founder of business advisory, Trachet, comments on how this will have a positive effect on investor confidence and subsequently activity in the UK.
In addition to the IMF’s announcement that the UK economy is expected to grow by 0.4% – an increase from their 0.3% increase forecast in April – the Office for National Statistic (ONS) has reported that inflation has fallen from 10.1% to 8.7%, the lowest level in over a year. While previous macroeconomic conditions played a role in decreasing investor confidence, with research from Pitchbook finding that the opening three months of Q1 saw UK businesses raise the lowest total VC investment since 2020, the outlook for investment in the second half of 2023UK appears increasingly optimistic.
According to a survey conducted by PWC, the UK is in the top three for global investment this year, behind the US and China. This, coupled with the predictions from the IMF and inflation decreasing could help revamp investor confidence in H2 of 2023. Trachet alludes to H2 of 2023 as a potentially opportune period for players in the tech and startup sector seeking investment. Venture capital investors in the United States, for example, are sitting on a $290 billion powder pile that’s ready to set off a new wave of tech startups across the globe. Serving as a testament to this, instead of predicting a “tougher” 2023, Gita Gopinath, deputy managing director of the International Monetary Fund, expects an “improvement” in the second half of the year and into 2024.
