IMF economy warning reverses FTSE 100 gains despite Unilever’s best efforts

A bleak set of projections from the International Monetary Fund (IMF) pegging UK growth as the worst in the G7 weighed on London markets today.

The capital’s premier FTSE 100 index remained unchanged, while the domestically-focused mid-cap FTSE 250 index, which is more aligned with the health of the UK economy, dropped 1.18 per cent to 19,568.79 points.

The IMF slashed its forecasts for UK growth 0.7 points to 0.5 per cent in 2023, putting the country at the bottom of G7 growth league.

The report triggered a sell off, causing the FTSE 100 to give up early morning gains.

A better than expected set of financials from Marmite maker Unilever initially lifted market sentiment.

The firm raised its profit forecasts despite hiking prices to offset severe cost pressure caused by Russia’s invasion of Ukraine raising food manufacturing costs.

Its shares shot up to second of the FTSE 100’s biggest risers’ table, climbing 2.95 per cent. 

That upgrade suggests Brits are still prepared to pay more for their favourite food brands.

Investors have been fearful of the UK economy being plunged into a recession if consumers react to historic high inflation by reining in spending.

“The challenges of inflation persist and the global macroeconomic outlook is uncertain,” Unilever chief executive Alan Jope warned.

The cost of living is forecast to top 12 per cent in October when another hike to the energy price cap lands, putting added pressure on household budgets.

The pound lost ground on the greenback, weakening 0.13 per cent to buy $1.2027.