The IMF has cut its 2017 growth forecast for the UK economy following a weak first quarter, suggesting Brexit is starting to hit consumers and businesses. The finance ministry renewed calls for a smooth exit from the EU.
The International Monetary Fund (IMF) in an update to its April forecasts lowered its 2017 growth forecast by 0.3 percentage points to 1.7 percent following weaker than anticipated first quarter figures, in which the British economy grew only 0.2 percent.
This growth was lower than any other Group of Seven economy and the IMF upgraded its forecasts for Europe's main economies, such as Germany and France.
Despite the downgrade, Britain's projected growth is just short of the eurozone's expected 1.9 percent growth rate.
"The ultimate impact of Brexit on the United Kingdom remains unclear," the IMF's chief economist Maurice Obstfeld said.
The IMF in April raised its forecasts for UK growth after the economy seemed not to have been immediately hit by the initial shock of the referendum decision in June last year to leave the EU.
The world's fifth-biggest economy has seen accelerating inflation - caused largely by the fall in the value of the pound since the Brexit vote - push consumers to rein in spending.
The economy is expected to only pick up a little speed to 0.3 percent in the second quarter, according to the median forecast of economists polled by the news agency Reuters ahead of the release of preliminary data on Wednesday.
The UK's finance minister, Philip Hammond, said the UK needs a transitional deal to ease Britain out of the EU, angering some Brexit campaigners. A spokesman for the finance ministry said on Monday that the weaker growth seen by the IMF was a reminder of the need for a smooth Brexit as much as possible.
"This forecast underscores exactly why our plans to increase productivity and ensure we get the very best deal with the EU, are vitally important," the spokesman said.
The IMF maintained its forecast for British economic growth to slow to 1.5 percent in 2018, slightly slower than expected growth in France and Germany next year.
jbh (Reuters, AP)