THE International Monetary Fund (IMF) cut its forecast for British growth yesterday, warning that the government could make more cuts to public spending after Brexit takes effect.
In its annual review of the economy, the IMF said gross domestic product (GDP) looked set to grow by 1.6 per cent this year, lower than its prediction of 1.7 per cent in October.
It stuck to its previous forecast that GDP would slow to 1.5 per cent in 2018.
The Washington-based organisation said companies were likely to continue deferring investment decisions until there was more clarity on Britain’s future trading relationship with the EU.
Meanwhile, the Office for Budget Responsibility (OBR) slashed its GDP forecast from 2 per cent to 1.5 per cent for this year.
It expects GDP to shrink from 1.6 per cent to 1.4 per cent in 2018, and from 1.7 per cent to 1.3 per cent in 2019.
Shadow chancellor John McDonnell said the downgraded forecasts prove that the Tory government has failed to invest in skills, training and infrastructure to boost national productivity.
He said: “The IMF has played the role of the ghosts of Christmas past, present and future to remind the Chancellor that the last seven years of Tory economic failure is undermining our economy.
“They confirmed the downbeat assessment last month by the OBR, highlighting low growth, the government’s productivity failure and neglect of the regions.
“The report also confirmed what we all know — that Conservative governments are good at cutting public services to give tax cuts to a wealthy few but hopeless at investing in the skills and infrastructure our country needs to develop an economy for the many.”
TUC general secretary Frances O’Grady added: “This shows that Brexit uncertainty has already harmed family budgets. Jobs and living standards must be the priority when deciding the best Brexit option for Britain.”
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