IMF cuts UK growth forecast citing 'tepid' economy and Brexit concerns

The International Monetary Fund has cut its growth forecast for the UK economy in its first downgrade since the Brexit vote last year.

The economy is expected to grow by 1.7 per cent this year, the IMF said, 0.3 per cent less than its April forecast, according to The Guardian.

That was because of a "tepid performance" so far this year, its economic counsellor Maurice Obstfeld said, as well as concerns over the terms of the UK's departure from the EU.

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"The ultimate impact of Brexit on the United Kingdom remains unclear," he said.

The downgraded forecast stood in contrast to other European Union countries. Germany was upgraded by 0.2 points and France by 0.1, taking them to 1.8 per cent and 1.5 per cent respectively. Italy and Spain both saw a 0.5 per cent rise in their growth predictions.

The IMF did raise the UK's growth forecasts following the Brexit vote, after activity was stronger than expected in the latter half of 2016. Last October it predicted growth of 1.1 per cent, but later raised this to 1.5 in January and then 2 per cent by April.

The UK is still predicted to grow by 1.5 per cent in 2018. The forecast was left unchanged but the organisation said the chief risk was that negotiations on leaving the EU would end in failure.

The United States also had its figures trimmed, to 2.1 per cent this year from 2.3 per cent. The IMF cited Donald Trump's failure so far to pass a series of tax cuts as the reason for the downgrade.