IMF cuts UK growth outlook

City A.M. Reporter
Britain's growth prospects for the next two years have worsened more than those of any other big advanced economy over the past three months, the International Monetary Fund said on Monday.

The sharp downgrade chimes with other economists' darkening assessments and raises questions whether a recent flurry of government measures to stimulate growth will be enough, or if it will have to ease back further on its fiscal austerity plans.

In a quarterly update to its World Economic Outlook, the IMF cut its British growth forecasts for 2012 and 2013 by 0.6 percentage points each, to just 0.2 per cent and 1.4 per cent respectively - well below what Britain's official forecaster, the Office for Budget Responsibility, predicted in March.

By contrast, the IMF's 2012 growth forecast for advanced economies as a whole is unchanged at 1.4 percent and for 2013 it has been cut by just 0.2 per cent to 1.9 per cent.

Britain's economy entered its second recession in four years at the end of last year as it struggles to recover from the effects of the financial crisis.

Earlier this month the Bank of England said it would pump an extra 50 billion pounds ($78 billion) of newly created money into the economy, its third round of monetary stimulus and taking the total to £375bn.