The International Monetary Fund slashed its forecast for UK economic growth, saying the vote to leave the European Union has “thrown a spanner in the works” of the global economy.
The IMF shaved off 0.9 percentage points from its previous economic forecast for the UK, estimating growth of 1.3% in 2017.
This year the UK will grow by 1.7%, the IMF said, down 0.2 points on its previous assessment made in April.
Maury Obstfeld, the IMF’s economic counsellor, said: “The first half of 2016 revealed some promising signs — for example, stronger than expected growth in the euro area and Japan, as well as a partial recovery in commodity prices that helped several emerging and developing economies.
“As of 22 June, we were therefore prepared to upgrade our 2016-17 global growth projections slightly. But Brexit has thrown a spanner in the works,” Obstfeld said. The organisation cut 0.1 percentage points from its 2016 and 2017 global growth forecasts of 3.1% and 3.4% respectively.
The IMF was a harsh critic of Brexit before the vote, warning a vote to exit the European Union could leave Britain’s economy more than 5% smaller by 2019 than with a vote to remain in April.