The International Monetary Fund on Monday maintained its growth forecasts for Britain but warned of risks from the eurozone debt crisis, spending cuts, volatile commodity prices and a weak housing market. In an annual report on Britain's economy, the IMF said the "growth outlook is subject to considerable uncertainties."
Gross domestic product growth was forecast at 1.5 percent this year, unchanged from the previous projection in June. GDP would then increase by 2.5 percent in the medium term, also unchanged. Growth "is expected to gradually accelerate ... as low interest rates and global growth support expansion led by net exports and investment," the IMF said.
"Nonetheless, there are large risks around this central scenario, including from uncertainties surrounding turmoil in parts of the euro area, headwinds from fiscal consolidation, volatile commodity prices and the housing market." The IMF also repeated its backing of the government's deep spending cuts that are aimed at slashing an enormous public deficit. "A wide-ranging policy program has been put in place to aid the post-crisis repair of the UK economy," it said.
"The agenda includes restoring confidence in public finances, moving to a safer financial sector and rebalancing the economy away from public and private consumption and toward more sustainable sources of growth (net exports and investment)." The report added: "The government has made progress on its medium-term fiscal consolidation plan, which is a central component of its overall macroeconomic strategy."