The International Monetary Fund has warned there is a one in six chance that the UK could be heading towards a double-dip recession. The IMF’s twice yearly World Economic Outlook report also said the world economy has “weakened significantly” and in a rebuke to politicians, claimed “policy indecision… has added to financial strains”.It also said the UK economy will grow at a slower pace than it had previously predicted.Its UK growth forecast for 2011 has been revised downwards from 1.5% to 1.1% and the IMF said there is a 17% chance the UK could be moving into another recession.
If the UK’s Gross Domestic Product (GDP) shrinks for two consecutive quarters, the country officially re-enters recession.For 2012, the IMF has reduced its estimate of economic growth from 2.3% to 1.6%.The Government’s official forecast for 2011 growth remains at 1.7% although the Chancellor has acknowledged this will be reduced when it is next reviewed.The UK’s economy was last in recession between September 2008 and December 2009, but growth has been sluggish since, increasing by just 0.2% in the most recent set of figures in July.
The suggestion from the IMF, based on share price movements, is that there is a chance the economy could shrink again – although its main forecast is still for growth.According to the IMF report, growth in the United States is forecast to slow to 1.5% in 2011 and 1.8% in 2012.Christine Lagarde, the fund’s recently appointed chief, has made repeated warnings that excessive austerity measures could cause another recession and urged European and US leaders to act to prevent a further deterioration in growth. – Skynews