IMF Cuts UK Forecasts

16 July 2012 17:00 - Phoebe Robinson

    



IMF Cuts UK Forecasts

Where forecasters were previously predicting growth they have now reversed these estimates and have cut their forecasts. The International Monetary Fund (IMF) has drastically cut its forecasts for UK economic growth over the coming years as it fears that there are heavy financial risks ahead. There are a number of crises across the global economy which was causing the risks. For example the eurozone sovereign debt markets, the looming US fiscal cliff, and the slowing growth in the emerging economies are what is worrying the IMF.  Moreover the IMF are fearful over the banks and have said, ‘uncertainties about the asset quality of banks balance sheets must be resolved quickly, with capital injections and restructurings where needed’.

The suffering UK economy has the biggest downgrades out of the advanced economies featured in the report. Growth of just 0.2% is forecast for this year and 1.4% for the following year after the forecasts for both years were cut by 0.6% compared with forecasts made in January.  The only explanation that the IMF has given for it GDP cuts is seen in their past reports. They seem to have continuing concerns over the combination of the worsening eurozone problems and domestic worries which include the lack of credit available to businesses in the UK.

 

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