The International Monetary Fund has downgraded its growth forecasts for both the US and the UK, after “weaker than expected” activity over the past three months.
The Washington-headquartered organisation dropped the UK’s growth forecast to 1.7 percent, after previously giving a figure of 2 percent. Whist it kept its estimate for 2018 unchanged at 1.5 per cent, the downgrade is the latest in a series of key figures suggesting that the UK’s economy may be beginning to suffer from the effects of Brexit.
The IMF also downgraded the US’s figure, from an original forecast of 2.3 percent to 2.1 percent. However, it maintained its global predictions of 3.5 percent in 2017 and 3.6 percent in 2018.
In its World Economic Outlook report the IMF said the “pick-up in global growth” it mentioned in its previous report remained “on track”, but added that there were “somewhat different contributions at the country level”.
Whilst the British economy continued to perform above expectations in the wake of the Brexit referendum in June last year, this year performance has begun to falter. The economy grew by just 0.2 per cent in the first quarter of 2017, making it the slowest-growing advanced economy. A fall in the value of the pound has led to inflation spiking close to 3 per cent, hitting household budgets, and consumer confidence figures have seen a marked drop.