The International Monetary Fund (IMF) has recently cut its previous UK economic growth forecast from 1.7% to 1.6%. Christine Lagarde, IMF chief commented that the uncertainty of the Brexit deal was causing the decrease with many UK firms delaying investment plans.It’s thought that the rising inflation which has been caused by the drop in Sterling is a factor for the recent decrease; however growth is also expected to slow next year to 1.5%.
Although the government have made progress Lagarde said “The UK is losing out as a result of higher inflation, pressure on wages and incomes and delayed investment”.
The IMF has made dramatic changes to the UK economic growth forecasts since the Brexit vote in June 2016. The forecast for 2017 was cut immediately after the vote from 2.2% to 1.3%. The forecast was then revised at the start of this year; however it has then been fluctuating since July.
Lagarde has refused to say that the IMF had been too gloomy and said “Our forecasts turned out to be the reality of the economy: higher inflation due to currency depreciation, wages down and delayed investment because of uncertainty.”
It is really interesting to read that the IMF have yet again changed their UK economic growth rates and we are interested to seeing what the results are in the New Year.