IMF slashes UK growth forecast for 2012 and 2013

16 July 2012 | By Chris Salih

The International Monetary Fund has cut its growth forecast for the UK by 0.6 per cent for 2012 and 2013.

In its quarterly economic report, released today, the IMF chopped the UK’s growth forecast from 0.8 to 0.2 per cent in 2012 and from 2 to 1.4 per cent in 2013. The falls are in comparison to its April forecast.

The fall comes as the IMF warns that the “sluggish global recovery shows signs of further weakness”, citing continued financial problems in Europe and slower than expected growth in emerging economies. The group did not go into further detail on why the UK faced such a sharp cut.

The IMF has also cut its global growth forecast from 3.6 to 3.5 per cent in 2012 and from 4.1 to 3.9 per cent in 2013. It said the cut in the global outlook would remain minor provided that there was enough policy action for financial conditions in the so-called euro area periphery; the US fiscal policy does not tighten sharply in 2013 and that steps are taken by some emerging markets to stimulate growth and gain traction.

The IMF chief economist and chief of the research department Olivier Blanchard says the biggest concern is delayed or insufficient policy action which will escalate the euro crisis.

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