IMF in new crisis warning for UK economy

By SCOTT MACNAB
Published on 17/07/2012 01:27

GLOBAL finance chiefs have slashed the UK’s growth predictions for the years ahead.

The eurozone debt crisis “continues to loom large”, according to the International Monetary Fund (IMF), which has downgraded growth forecast for the UK more than any developed economy.

The economy is now expected to grow by just 0.2 per cent this year – down from 0.8 per cent just three months ago.

The prediction comes in a new report, which warns that long-term unemployment is at “crisis” levels, threatening to plunge older workers into premature retirement.

The latest IMF predictions follow the UK’s slide into a double-dip recession in the first quarter of the year and a gloomier outlook for the world economy.

It prompted fresh calls for Chancellor George Osborne to come up with a stimulus package in an effort to get the economy moving.

The IMF has also lowered its expectations for the UK’s growth next year to 1.4 per cent, from 2 per cent previously.

The report warned that policy­makers needed to take further action to tackle the euro­zone crisis and help to arrest the slowdown in emerging markets, whose potential to contribute to the global economy might have been overestimated.

It said: “Clearly, downside risks continue to loom large, importantly reflecting risks of delayed or insufficient policy

action.”

A spokeswoman for the Scottish Government said: “The downward revisions to the IMF’s growth forecasts reflect the ongoing economic challenges that the world economy faces to

secure growth.

“In Scotland, the UK government’s failing austerity programme, alongside the slowdown in the global economy and the continuing debt crisis in the eurozone, are all acting to slow our recovery.”