The International Monetary Fund has cut its growth forecast for the UK economy, amid warnings that the global economy has entered a dangerous new phase.
In its latest forecast last week, the IMF claimed the global economic recovery is slowing and world growth is projected at 4% in both 2011 and 2012, down from 5% in 2010.
It is now predicting that the UK will see growth of 1.1% in 2011, revised down from 1.5% in its June forecast, and growth of 1.6% in 2012, revised down from 2.3%.
The IMF says a barrage of economic shocks in 2011 created a worse than anticipated outcome. It says: “The global economy is in a dangerous new phase. Global activity has weakened and become more uneven, confidence has fallen sharply recently, and downside risks are growing.”
Olivier Blanchard, chief economist at the IMF, says: “Strong policies are urgently needed to improve the outlook and reduce the risks. Only if governments move decisively on fiscal policy, fin ancial repairs and external rebalan cing can we hope for stronger and more robust recovery.”