IMF: UK growth cut as global growth projections are hiked

Oliver Gill
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The UK economy had slowed more than previously anticipated, the IMF said (Source: Getty)

The UK's economic growth has been cut by the IMF, which singled the country out as a "notable exception" to a wider global upgrade.

While the report was "generally positive" about global fortunes, UK growth was marked down 0.3 per cent in 2017 to 1.7 per cent.

The downgrade prompted the Labour to say "that seven years of Tory economic failure has left our economy fundamentally weakened".

In its World Economic Outlook, the IMF upgraded its growth projections to 3.6 per cent and 3.7 per cent in 2017 and 2018 respectively. The latest forecasts represent a 0.1 per cent upgrade in both years.

"Growth has been marked down for 2017 in the UK and for both 2017 and 2018 in the US, implying a 0.1 percentage-point aggregate growth downgrade for advanced economies in 2018," the WEO report read.

Activity in the UK slowed more than anticipated in the first half of 2017; as for the US given the significant policy uncertainty, the forecast now uses a baseline assumption of unchanged policies, whereas in April it assumed a fiscal stimulus driven by then-anticipated tax cuts.

Read more: IMF bosses call for Trump's America to raise taxes

Labour shadow chancellor John McDonnell lamented Britain's poor global showing.

“The IMF report out today is yet another blow to the Chancellor’s already crumbling economic credibility – it is no wonder many of his fellow colleagues in his own party are calling for him to be sacked," he said.

“With nearly all other advanced economies recovering at a faster rate than the UK, alarm bells should be ringing at the Treasury. Philip Hammond’s plans to continue the austerity policies of his predecessor are failing."

The IMF said its global upgrade in 2017 was a product of "brighter prospects for the advanced economies". The 2018 revision was boosted by emerging market and developing economies playing a larger role.

And it warned that despite today's upgrade, growth is still lagging behind previous years. The average per capita growth is projected to be 1.4 per cent between 2017 and 2022, compared with 2.2 per cent achieved between 1996 and 2005.

Seven things the IMF said governments need to prioritise:

  1. Strengthening the global trading system
  2. Further improving financial regulation
  3. Enhancing the global financial safety net
  4. Reducing international tax avoidance
  5. Fighting famine and infectious diseases
  6. Mitigating greenhouse gas emissions before they do more irreversible damage
  7. Helping poorer countries—which are not themselves substantial emitters—adapt to climate change

Read more: IMF downgrades UK growth forecast

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