IMF cuts UK annual growth forecast

The International Monetary Fund (IMF) has cut its forecast for UK annual growth from 2.2% to 1.9%, citing the ‘uncertainty’ posed by the EU Referendum. In 2015, Britain’s economy expanded by 2.3%, with economists expecting that growth would slow this year and
in subsequent years, a view shared by the IMF who have kept their forecast of 2.2% growth in 2017 unchanged.

 The IMF believes that ‘A British exit from the European Union could pose major challenges for both the UK and the rest of Europe. Negotiations on post-exit arrangements would likely be protracted, resulting in an extended period of heightened uncertainty that could weigh heavily on confidence and investment, all the while increasing financial market volatility’.

The Prime Minister, not surprisingly, supports this view commenting, “The IMF is right – leaving the EU would pose major risks for the UK economy. We are stronger, safer and better off in the European Union.” However, those campaigning for Britain to leave the EU have rejected the views held by the IMF and have accused it of downgrading the UK’s forecast at the request of the Chancellor, George Osborne. They also point out that IMF forecasts for the UK have often proved wrong in the past.

Those advocating the UK’s exit from the EU believe that remaining in an unreformed EU poses even bigger risks. They argue that fundamental problems with the European banking system and the euro remain unsolved, as does the current migration crisis.

The UK isn’t the only economy to see its forecasts cut by the IMF. The US forecast has been reduced from 2.6% to 2.4%, with the global growth figure scaled back from 3.4 % to 3.2%.

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