The International Monetary Fund has cut its growth forecasts for the UK economy, amid warnings that the global economy has entered a dangerous new phase.
In its latest forecast, the IMF says 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 that a barrage of economic shocks in 2011 has combined to create 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 to reduce the risks. Only if governments move decisively on fiscal policy, financial repairs and external rebalancing can we hope for stronger and more robust recovery.”