The International Monetary Fund has cut its 2018 growth forecasts for the UK, revising down from 1.6% to 1.4%.
Updating its forecasts from April, the global organisation warned of risks from trade tensions, as characterised by Brexit talks and tariffs announced by the US. Its 2019 predictions for 1.5% growth remain unchanged.
Last year, IMF head Christine Lagarde said it was clear the UK was “losing out” as a result of the Brexit vote.
The IMF also revised growth predictions for the eurozone and Japan, as the organisation cited a “softer than expected” first quarter performance and tighter financial conditions brought on partly by political uncertainty.
The eurozone’s 2018 growth forecast was cut to 2.2% from 2.4% while Japan’s growth projection was cut to 1% from 1.2%.
“An escalation of trade tensions could undermine business and financial market sentiment, denting investment and trade,” the IMF report said.
“Higher trade barriers would make tradable goods less affordable, disrupt global supply chains, and slow the spread of new technologies, thus lowering productivity.”
The IMF said growth prospects are below average in many countries and its report urged governments to take steps to ensure continued economic growth.
IMF chief economist Maury Obstfeld warned that “the risk of worse outcomes has increased” for the world economy as trade conflicts widened.
The IMF’s forecast revision comes two months after the Organisation for Economic Co-operation and Development (OECD) warned that political chaos in Italy and the Brexit negotiations pose major risks for the European economy.
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The OECD used its economic outlook to warn that while the global economy was growing rapidly, there were still significant risks on the horizon.
Despite ongoing global trading tensions, US growth predictions remained unchanged, with the IMF still anticipating tax cuts will lift economic growth to 2.9% in 2018, up from 2.3% last year.