IMF downgrades UK and USA: ‘Germany, Italy, Spain and Japan will maintain global growth’ | UK | News

The Treasury has urged the Government to secure the “very best deal” on Brexit after the International Monetary fund downsized its prediction for the UK’s growth.

Despite record high employment and cutting away at the deficit, the UK’s economy faces pessimism following “weaker-than-expected activity” at the start of the year.

Having downgraded both the UK and USA, the IMF said the eurozone and Japan would fill the vod for overall global growth. 

In the July update of its World Economic Outlook, the IMF forecast global economic growth of 3.5 percent for 2017 and 3.6 percent for 2018, unchanged from its April outlook.

That was despite earlier cutting its U.S. growth projection to 2.1 percent from 2.3 percent for 2017 and to 2.1 percent from 2.5 percent for 2018, citing both weak growth in the first quarter of this year as well as the assumption that fiscal policy will be less expansionary than previously expected.

A weaker-than-expected first quarter also spurred the IMF to cut its forecast for UK growth for this year to 1.7 percent from 2.0 percent, while leaving its 2018 forecast at 1.5 percent.

The eurozone faced a boost from the IMF, who raised their predicted growth for the next two years after economies in Germany, France, Italy and Spain exceeded expectations.

The Treasury has urged the Government to secure the “very best deal” on Brexit after the International Monetary fund downsized its prediction for the UK’s growth.

A Treasury spokesman said: “This forecast underscores exactly why our plans to increase productivity and ensure we get the very best deal with the EU are vitally important.

“Employment is at a record high and the deficit is down by three-quarters, showing that the fundamentals of our economy are strong.

“We will continue to deliver greater prosperity and higher living standards for hard working people across the country.”

The organisation lowered expectations for Britain’s economy over the course of 2017, predicting a 1.7 per cent increase.

The prediction, down from April’s prediction of two per cent, comes as the Washington based financial powerhouse throws its optimism behind the Eurozone and China.

While the IMF dropped down British growth expectations by 0.3 per cent, they raised predictions for the Eurozone by 0.2 per cent – making the predicted growth on the continent for 2017 higher than the UK’s.

An IMF spokesperson said: “The growth forecast has also been revised down for the United Kingdom for 2017 on weaker-than-expected activity in the first quarter.

“By contrast, growth projections for 2017 have been revised up for many euro area countries, including France, Germany, Italy, and Spain, where growth for the first quarter of 2017 was generally above expectations.”

It comes as Labour frontbencher Barry Gardiner claims a free trade deal with the EU “should be very easy” – but said Brussels politics is getting in the way.

Barry Gardiner appeared to criticise the EU side of the Brexit negotiation for making the “easy issue of a free trade deal” a political fight.

The Labour MP said: “It should be a very easy deal to do. Unless politics gets in the way and the EU have their own political reasons to make that difficult.

“The EU wants to make it clear to the members of the 27 that they should not leave like the UK because they’d be worse off. Brussels has political objectives in this.

“We should not be naive. They want to maintain the European project. So we have to be clear on our outcomes.”

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