IMF to slash UK growth forecasts in wake of Brexit vote

LONDON: The International Monetary fund will slash its forecasts for UK growth this week as the impact of the Brexit vote triggers a wave of downgrades across Europe.

Christine Lagarde, the IMF's managing director, warned that the Fund was also likely to cut its projections for world growth for the third time this year as global risks mount. "I have very little hope that it will be revised up, and I have serious concern that it might be revised down," she said last week. In an update of its World Economic Outlook, the IMF is likely to cut its 2016 UK growth projection to below 1.7pc, from a forecast of 1.9pc in April. Growth in 2017 is likely to be forecast to be below 1.4pc, down from an estimate of 2.2pc three months ago. The IMF's analysis of the impact of Brexit warned that leaving the bloc would deliver a "negative and substantial" blow to the UK economy. Published before the June vote, it said a messy exit would plunge the country into recession. However, the Government's decision to abandon a plan to balance the books by 2020 and open the door for more infrastructure investment to reboot the economy is likely to support growth.

Theresa May appointed a new cabinet last week after rival Andrea Leadsom dropped out of the race to become prime minister. This ended what could have been months of uncertainty as the Tory party selected a new leader. The Fund warned last week that the UK's decision to leave the EU would also hurt growth across Europe.