The decision to leave the European Union has thrown a “spanner in the works” for UK growth leading the International Monetary Fund slash its forecast for the economy – but admitted the UK would still outperform Germany and France.
Before the Brexit vote the IMF warned of a devastating recession if the UK voted to leave the EU.
The IMF said the decision to leave the EU has damaged the British economy’s short-term prospects.
It predicts the UK economy will grow by 1.3% in 2017, almost 1% lower than its previous forecast before the vote. But they said the other economies in Europe would only grow by 1.2%.
The IMF urged both the UK and EU members to end the uncertainty: “Of primary importance is a smooth and predictable transition to a new set of post-exit trading and financial relationships that as much as possible preserves gains from trade between the UK and the EU.”
Maury Obstfeld, the IMF’s economic counsellor, said: “The first half of 2016 revealed some promising signs – 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.”