The UK economy will shrink and perform worse than other advanced economies as the cost of living continues to hit households, the International Monetary Fund (IMF) said today.
The IMF said the economy will contract by 0.6% in 2023, rather than grow slightly as previously predicted.
The new forecast reflects Britain's expensive energy prices and financial conditions such as high inflation.
Chancellor Jeremy Hunt said the UK outperformed many forecasts last year.
In its world economic outlook update, the IMF, which works to stabilise economic growth, said Britain's gross domestic product (GDP) would shrink, rather than grow by 0.3% this year.
It predicted the UK would be the only country - across the world's advanced and emerging economies - to suffer a year of declining GDP.
Improvement in 2024
However, the IMF said that, in 2024, it expected British growth to be 0.9% - up from 0.6% previously.
The BBC says GDP is a measure for looking at how well, or badly, an economy is doing and, in a growing economy, each quarterly GDP will be slightly bigger than the quarter before.
If a country's GDP falls for two quarters in a row, it means it is in recession and it is a sign that its economy is doing badly. Typically when a country is in recession, companies make less money and the number of people unemployed rises.
The IMF's bleak picture for the UK comes after Mr Hunt warned it was "unlikely" that there would be room for any "significant" tax cuts in the Spring Budget.
The chancellor, who has been under pressure from some in his party to cut taxes to stimulate the economy, said that a pledge to halve the rate of inflation "is the best tax cut right now".
Inflation, which is the rate at which prices rise, hit 10.5% in the 12 months to December, close to a 40-year high.
Halving inflation
Prime Minister Rishi Sunak has pledged to halve inflation by the end of the year, although some economists have said price rises will slow without government policies, due to commodity prices and shipping costs decreasing.
Andrew Bailey, the governor of the Bank of England, said inflation is likely to fall rapidly this year as energy prices fall, but has warned a UK recession is still on the cards.
While the IMF has predicted the British economy to contract, it forecast economic growth of 1.4% in the US, 0.1% in Germany, 0.7% in France, 0.6% in Italy, 1.8% in Japan and 1.5% in Canada.
However, the Treasury said that, since 2010, the UK had grown faster than France, Japan and Italy and that, since the EU referendum in 2016, it had grown at "about the same rate as Germany".
"Cumulative growth over the 2022-24 period is predicted to be higher than Germany and Japan, and at a similar rate to the US," a spokesman added.
Overall, the IMF estimated global inflation passed its peak and will fall from 8.8% last year to 6.6% in 2023 and 4.3% in 2024.