IMF lowers UK growth forecast again for 2013

The International Monetary Fund's twice-yearly look at the world economy has lowered its forecasts for most developed economies, including the UK. The IMF said world growth would now be 3.3% for the year, down from 3.5% forecast six months ago.

For the UK, it is forecasting growth of just 0.7%, after saying in January that the country's economy could anticipate 1% growth.

The figure is slightly above the 0.6% growth forecast in last month's Budget. That figure came from the independent Office for Budget Responsibility.

The IMF's World Economic Outlook report also cut its forecast for the eurozone this year to -0.3%, with Germany, the strongest economy, expected to grow by 0.6%, but France on course to shrink by 0.1%. The IMF said the UK was "progressing slowly". It suggested the Chancellor, George Osborne, should consider reining back his austerity plan. The IMF's report said: "In the United Kingdom, the recovery is progressing slowly, notably in the context of weak external demand and ongoing fiscal consolidation."

It said economic weakness and a lack of willingness to lend were holding back the private sector. The IMF rarely gives direct advice, preferring to give discreet prompts.

It said about the UK: "Greater near-term flexibility in the path of fiscal adjustment should be considered in the light of lacklustre private demand."

Director of Economics from the business lobby group the CBI, Stephen Gifford said, "With recent data from our business surveys suggesting that growth at the beginning of this year was broadly flat, it's not surprising that the IMF has lowered its forecast."

BBC