IMF cuts UK growth forecasts by 0.9%

The IMF says that the "unexpected UK vote to leave the European Union creates a wave of uncertainty amid already-fragile business and consumer confidence".

“The Brexit vote implies a substantial increase in economic, political, and institutional uncertainty, which is projected to have negative macroeconomic consequences, especially in advanced European economies,” according to the IMF’s World Economic Outlook Update.

“Brexit has thrown a spanner in the works,” said Maurice Obstfeld, IMF Chief Economist and Economic Counsellor.

The IMF warned that “more negative outcomes are a distinct possibility.”

“The real effects of Brexit will play out gradually over time, adding elements of economic and political uncertainty,” said Obstfeld. “This overlay of extra uncertainty, in turn, may open the door to an amplified response of financial markets to negative shocks.”

Its global forecast for 2017 has been cut by 0.1 percentage point to 3.4%. "If not for Brexit, global forecast would have been slightly higher", according to the report.

The IMF also urged advanced nations to "avoid relying too heavily on monetary policy to spur their economies and to exploit synergies among a range of policy tools".