The Eurozone banking lending survey shows a weakening that will occur and persist in 2023. The IMF forecasts that the UK economy will shrink by 0.6% in 2023, so it is the only country in the G7 membership expected to have negative growth HDI this year.

Data keeps coming thick and fast on Tuesday, especially in the Eurozone, ahead of the ECB meeting on Thursday. None of the releases said they agreed with the bank's policy decision this week because a 50 bps hike and hawkish tone are almost certain to happen.

However, in the bigger picture, public opinion and the IMF could influence the central bank's decision in March. The general tone has been positive, and there has been more evidence that the recession in the EU should be mild. 

So this is expected to manage to stay positive. Meanwhile, the UK is the only economy in G7 expected to drop into a recession by the IMF. 

This relative weakness has been broadly expected, but this also much underlines the UK's mounting problems. The GBP exchange rate also weakened compared to several other major currencies.

What Happened to the UK Economy and Should You be Worried About It?

This week's data shows expectations for a 50 bps hike for the ECB and a hawkish outlook. And the ECB focuses on the UK as, in many sectors, there is pressure for a deep recession. 

It has been a major factor in the latest positive figure for the economy's health. The IMF called for the UK to drop into recession as it had little effect on markets and the Pound. 

By this time, the IMF report on an issue, and that is common knowledge. And, since the Pound has shown relative weeks for some time, it is hoped that EUR GBP can fix its position.

Meanwhile, the International Monetary Fund warned Britain because the UK is expected to be the only large industrialized country in the G7 membership which will face a shrinking economy this year. Moreover, the UK economy is predicted to contract by 0.6% this year.

The IMF believes the UK will suffer from an economic contraction in 2023. One step will be to ask Britain to increase the employment level. Meanwhile, the UK has had to raise interest rates faster than other countries to tackle inflation.

Many are trying to relate this to Brexit because the economy in EU countries is improving faster than in the UK. But experts say that this has absolutely nothing to do with Brexit. This is simply because the UK is underperforming in the forex market.

And many are also asking whether the public, in general, needs to do anything. From the current conditions, there's little that can be done. The direct economy of the UK is proof that the IMF has changed its projections for the UK in terms of the economic outlook.

Central Banks Start Taking Action By Raising Interest Rate to 4%

"As wage growth and core inflation have continued to surprise to the upside, then we expect another 50 bp hike on Thursday, in line with market pricing," said Peder Beck Friis, portfolio manager at PIMCO, when asked about UK economic conditions and what will happen next.

This would be the BoE's tenth interest rate rise in a row since it started tightening policy in December 2021. The increased level is still shrouded in some uncertainty as some traders recalled the lack of suspense, but economists feel greater economic optimism.

The UK economic condition has been driven partly, mainly due to recent moves that have yet to be entirely strategic. This even triggers the notion that the UK will get into the recession zone. The IMF gave these predictions, affecting the pound exchange rate.