IMF downgrades UK and US growth forecasts but remains upbeat on global economy

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Growth for 2017 is now expected to be 1.7 per cent (Source: Getty)

The International Monetary Fund has downgraded its predictions for growth in the UK economy.

Following "weaker-than-expected activity" in the first three months of the year, the UK's predicted growth for 2017 was adjusted from two per cent down to 1.7 per cent.

But the prediction for 2018 growth was maintained at 1.8 per cent as the IMF said that the UK's fundamentals were strong, but that a breakdown in Brexit negotiations could threaten stable growth.

The IMF also contrasted the UK's performance with that of various euro area countries. Growth was above expectations in France, Germany, Italy and Spain, which all received slight upgrades in their forecasts.

The US was also downgraded from 2.3 per cent to 2.1 per cent. This was mainly attributed to the assumption that "fiscal policy will be less expansionary" than previously anticipated, and uncertainty over the timing of policy changes in the current climate.

But the global economy was considered to be in a healthier shape. Predictions of 3.5 per cent growth in 2017 and 3.6 per cent in 2018 remain unchanged.

The IMF said: "The recovery in global growth that we projected in April is on a firmer footing; there is now no question mark over the world economy’s gain in momentum."

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However, the estimates are still below averages from before the financial crisis, especially in economically advanced economies.

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