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IMF forecasts UK will miss out on global growth

A rising tide lifts most boats, according to the latest International Monetary Fund forecasts, which saw upgrades for almost every major economy except the UK.

In an update to its World Economic Outlook, the IMF lifted its global growth prediction to 3.9pc for both this year and next. That would be the strongest expansion since 2011.

Excluding the UK, there were upward revisions for every Group of Seven nation, while projections for China were also raised. For the UK, where Theresa May’s government faces crucial Brexit talks, growth is seen at 1.5pc in both years.

That’s unchanged for 2018 and marks a modest 0.1pc reduction for 2019. It’s not the first time that IMF optimism hasn’t extended to the UK.In October, its 2017 estimate for the economy was left unchanged amid upgrades elsewhere.

In an update of its World Economic Outlook, the IMF however warned that US growth would likely start weakening after 2022 as temporary spending incentives brought about by the tax cuts start to expire.

The tax cuts would likely widen the US current account deficit, strengthen the dollar and affect international investment flows, IMF chief economist Maurice Obstfeld said.

US President Donald Trump signed Republicans’ massive $1.5trn tax overhaul into law in December, cementing his biggest legislative victory. The tax package, the largest such overhaul since the 1980s, slashed the corporate rate from 35pc to 21pc and temporarily reduced the tax burden for most individuals as well.The US economy has been showing steady but underwhelming annual growth since the last recession in 2007-2009. The Fund revised up its forecast for global growth to 3.9pc for both 2018 and 2019, a 0.2 percentage point change from its last update in October.

It also said that economic activity in Europe and Asia was surprisingly stronger than expected last year, and global growth in 2017 was now estimated to have reached 3.7pc, 0.1 percentage point higher than the Fund projected in October. (Bloomberg, Reuters)

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