Britain is the only member of the group of seven nations whose economy is likely to shrink in 2023, according to the International Monetary Fund's January forecasts.

The country has been grappling with a cost of living crisis, with discontent spilling out onto the streets with months of strikes.

"We have told the government there's an increasing problem."

While the US and other nations have begun to rebound from the pandemic, the UK has been struggling to turn the tide.

The UK's flagging economy now looks set to shrink by 0.6% this year, even being outperformed by sanctions-hit Russia.

Here's why:

Energy prices worldwide soared following Russia's invasion of Ukraine.

In the UK, inflation is close to its highest in 40 years, largely driven by those high energy costs.

Britain was hit particularly hard as it relies on natural gas for much of its power generation and has limited storage capacity.

Meanwhile, the US was able to knock down prices domestically after the government released record amounts of oil from its Strategic Petroleum Reserves.

In many countries, for example, the US, inflation is beginning to ease, thanks partly to policies heightening by central banks.

The Federal Reserve hiked interest rates multiple times last year in a bid to curb inflation.

It now appears to be paying off.

Consumer spending is starting to falter, and price increases are easing, suggesting that the US economy is slowing down.

The UK central bank, the Bank of England, also raised interest rates to try to slow inflation, yet UK prices have continued to rise rapidly.

Grocery prices surged nearly 17%, and the trade association, the British Retail Consortium, says prices have yet to peak.

Workers across sectors have suffered a decline in inflation-adjusted wages, especially those whose salaries are paid for by the state.

Strikes from workers, such as train drivers, postal workers, nurses and teachers, have become a familiar sight across the UK.

"The NHS."

"We are the NHS."

"Things continue to increase, except for our pay.

Our working conditions have not changed. In fact, they've got worse."

Another problem for growth is that the country's employment rate has yet to recover to pre-pandemic levels, unlike most other G7 nations.

The UK is suffering from a decline in the workforce with a number of vacancies close to record levels.

Many have taken early retirement, and Britain's exit from the EU has put more barriers in place for workers from the bloc, meaning gaps aren't able to be filled as easily.

To compare, in the US, where the unemployment rate is at a multi-decade low, the total workforce rose to a new record in January; however, there are signs that the tide could also be turning.

The Bank of England has moderated its economic growth forecasts for the UK, which were previously very negative.

It thinks that while Britain is still expected to enter a recession, that it's likely to be shallower and shorter than previously feared.

And it says that inflation is likely to drop sharply this year.

The Bank of England raised its key interest rate on February 2nd, but it signaled that it may pause soon, meaning the economy won't have to endure further sizable increases in borrowing costs.

"We have seen a turning of the corner but it's very early days and the risks are very large and it's really that that I think shapes where we go from here."