IMF cuts UK growth forecast ahead of Brexit vote

Another major warning to Britain...

IMF cuts UK growth forecast ahead of Brexit vote

Stefan Rousseau / PA

The International Monetary Fund has slashed its world growth forecast yet again today, with its outlook for Britain deteriorating as Brexit looms.

Its forecasts for the 2016 performances of the global, euro and UK economies were all reduced 0.2% from January predictions.

Britain voting to leave the European Union was named as one of the major risks currently facing the world's economy, alongside the violent instability in countries such as Syria.

IMF Chief Economist Maurice Obstfeld said:

"The planned June referendum ... has already created uncertainty for investors. A Brexit could do severe regional and global damage by disrupting established trading relationships".

It is perhaps the gravest statement on a potential Brexit released from a major international body.

Responding to the IMF report, the British Chancellor of the Exchequer George Osborne commented:

"Well today we have a stark warning from the IMF. For the first time they're saying that the threat of Britain leaving EU is having an impact on our economy and they cut our growth forecast as a result.

"They say were we actually to leave the EU there would be a short-term impact on stability and a long-term cost to the economy".

Obstfeld also voiced his concerns over the widespread general backlash against economic integration, not only pointing to eurosceptic parties in the EU but also the isolationist policies espoused by US presidential candidates such as Donald Trump.

While China is now expected to grow at the slightly higher level of 6.5%, the IMF still expects weakening growth as the country moves to a consumer-driven economy.

The IMF reported:

"A sharper slowdown in China than currently projected could have strong international spillovers through trade, commodity prices, and confidence, and lead to a more generalized slowdown in the global economy, especially if it further curtailed expectations of future income".