IMF reports gloomy outlook for UK economy

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The International Monetary Fund (IMF) has slashed it forecast for UK growth for both this year and 2014, with the prediction being another setback for the government’s economic management.

The IMF’s outlook is likely to be supported by the next set of gross domestic product (GDP) figures, which analysts predict will show that the UK economy contracted in the final quarter of 2012.

According to the IMF, the UK economy will grow by 1% this year – 0.1% down on in its October forecast – and by 1.9% next year – 0.3% down on its last World Economic Outlook report.

The IMF said it now expected the eurozone to stay in recession throughout 2013, having previously predicted growth.

"The euro area continues to pose a large downside risk to the global outlook," the IMF report said.

"In particular, risks of prolonged stagnation in the euro area as a whole will rise if the momentum for reform is not maintained."