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Brexit just forced the IMF to cut its growth forecast for Britain's economy

Jul 19, 2016, 18:59 IST

International Monetary Fund (IMF) Managing Director Christine Lagarde gestures as she arrives at a G-24 meeting during 2013 Spring Meeting of the International Monetary Fund and World Bank in Washington, April 18, 2013. REUTERS/Yuri Gripas

The International Monetary Fund slashed its forecast for UK economic growth, saying the vote to leave the European Union has "thrown a spanner in the works" of the global economy.

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The IMF shaved off 0.9 percentage points from its previous economic forecast for the UK, estimating growth of 1.3% in 2017.

This year the UK will grow by 1.7%, the IMF said, down 0.2 points on its previous assessment made in April.

Maury Obstfeld, the IMF's economic counsellor, said: "The first half of 2016 revealed some promising signs - for example, stronger than expected growth in the euro area and Japan, as well as a partial recovery in commodity prices that helped several emerging and developing economies.

"As of 22 June, we were therefore prepared to upgrade our 2016-17 global growth projections slightly. But Brexit has thrown a spanner in the works," Obstfeld said. The organisation cut 0.1 percentage points from its 2016 and 2017 global growth forecasts of 3.1% and 3.4% respectively.

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The IMF was a harsh critic of Brexit before the vote, warning a vote to exit the European Union could leave Britain's economy more than 5% smaller by 2019 than with a vote to remain in April.

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