IMF Downgrades Growth Forecast

21st December 2017.

The IMF has cut its UK economic growth forecast, blaming Brexit uncertainty.

The International Monetary Fund (IMF) expects growth of 1.6 percent this year, down slightly from its previous forecast of 1.7 percent. It expects growth to slow further next year, to 1.5 percent.

IMF chief Christine Lagarde said uncertainty over the Brexit deal and rising inflation were causing UK firms to delay investment plans.

Ms Lagarde said that increased productivity was key to increasing living standards and that a new trade deal could help restore productivity levels in the UK.

She said: “The shape of the new agreement with the EU will affect productivity performance through its implications for trade, investment and migration.

Critics called the IMF forecast after the referendum too “gloomy”, and Brexit supporter and economist Ruth Lea paints a brighter picture.  While Ms Lea acknowledges that incomes have become squeezed since the fall in Sterling, she also insists this has helped exports. .

Ms Lea, who is an economic adviser to the Arbuthnot Banking Group, also expects inflation to fall, which would help company and household finances.

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