IMF downgrades UK’s growth forecast as economy weakens

The IMF has downgraded its growth forecast for the UK after weaker-than-expected economic performance. Picture: PA
The IMF has downgraded its growth forecast for the UK after weaker-than-expected economic performance. Picture: PA
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The International Monetary Fund (IMF) has downgraded its growth forecast for the UK after weaker-than-expected economic performance.

In its latest World Economic Outlook, the organisation said it now expects the economy to grow by 1.7 per cent, down from April’s 2.0 per cent prediction.

It comes in contrast to other major European countries, such as Germany, France and Spain, where growth exceeded expectations, the IMF said.

The Treasury said the report shows why securing the “very best deal” on Brexit with the European Union is “vitally important”.

Prime Minister Theresa May has previously insisted that no deal is better than a bad deal when Britain quits the bloc.

“The growth forecast has also been revised down for the United Kingdom for 2017 on weaker-than-expected activity in the first quarter,” the IMF said.

“By contrast, growth projections for 2017 have been revised up for many euro area countries, including France, Germany, Italy, and Spain, where growth for the first quarter of 2017 was generally above expectations.”

UK growth forecasts for next year remain unchanged at 1.5 per cent, the IMF said.

The Treasury insisted the fundamentals of the UK economy are strong, with employment at a record high and the deficit down by three quarters since 2009.

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A spokesman said: “This forecast underscores exactly why our plans to increase productivity and ensure we get the very best deal with the EU are vitally important.

“Employment is at a record high and the deficit is down by three quarters, showing that the fundamentals of our economy are strong.

“We will continue to deliver greater prosperity and higher living standards for hard working people across the country.”

Maurice Obstfeld, chief economist of the IMF, said the figure was based purely on economic growth so far in 2017, rather than any concerns over Brexit in the future.

He told BBC Radio 4’s Today programme: “I think we stick to our forecasts that Brexit will be a negative to the British economy.

“Our forecasts are right now that it’s a mild negative, because we have a favourably optimistic view of how the negotiations will go.

“But if the parties are not reasonable and collaborative, things could be worse.”

Mrs May’s official spokesman described the IMF assessment as “one of a number of forecasts”.

The spokesman added: “Owing to years of hard work and sacrifice by the public, the UK economy is in a strong position. We have employment at a record high and the deficit down by three-quarters.

“We will continue to deliver greater prosperity and higher living standards for hard-working people across the country.”