All the day’s economic and financial news, including a new healthcheck on Europe’s factories and service companies
- IMF cuts UK growth forecast to 1.7% this year
- Treasury insists ‘fundamentals are strong’
- Eurozone growth forecasts raised
- Fund fears Brexit could hurt global recovery
The IMF has also cut its growth forecast for the US, having concluded that Donald Trump will struggle to deliver the infrastructure plan he promised.
Growth this year has been cut from 2.3% to 2.1%, while 2018’s forecast has been slashed from 2.5% to 2.1%.
While the markdown in the 2017 forecast reflects in part the weak growth outturn in the first quarter of the year, the major factor behind the growth revision, especially for 2018, is the assumption that fiscal policy will be less expansionary than previously assumed, given the uncertainty about the timing and nature of U.S. fiscal policy changes.
Market expectations of fiscal stimulus have also receded.
Britain’s finance ministry has responded to the news that the International Monetary Fund have cut their UK growth forecasts this year.
“This forecast underscores exactly why our plans to increase productivity and ensure we get the very best deal with the EU are vitally important.”