Belfast Telegraph

IMF cuts economic growth forecast

By James Tapsfield

If David Cameron needed clarity on how important maintaining good trade links with Europe is, then he was handed it on a plate with the arrival of the latest predictions from the International Monetary Fund.

In a set of widely watched forecasts it trimmed its expectations for UK and global economic growth for both this year and the next.

The UK will only expand by 1% in 2012-13, according to the respected body, 0.1% less than previously predicted.

The forecast for next year has been downgraded from 2.2% to 1.9% since October.

The figures emerged ahead of the publication of official GDP estimates for the final quarter of last year, which many fear will show UK plc contracting.

The IMF's World Economic Outlook update predicted that the global economy would grow 0.1% less than anticipated in each year, by 3.5% and 4.1% respectively. Much of the reduction stemmed from a weaker outlook for the eurozone.

"Policy actions have lowered acute crisis risks in the euro area and the US. But in the euro area, the return to recovery after a protracted contraction is delayed," the IMF said.

Shadow chief secretary to the Treasury Rachel Reeves said: "The IMF said over a year ago that a plan B would be needed in Britain if growth was to turn out lower than expected.

"Since then we've had a double-dip recession, yet more growth downgrades and borrowing rising as a result, so there can be no question that a change of course is needed."