IMF delivers a blow to growth forecasts

The International Monetary Fund has issued a warning this afternoon to Europe and the US that their economies could slip back into recession next year unless they quickly tackle economic problems that could infect the rest of the world.

The report says that the two regions present the biggest risks to the global economic outlook,and warns that political gridlock could block remedial action.

It has also cut its forecast for global growth to 4.0 percent for this year whereas just three months ago it had projected an expansion of 4.3 percent for 2011 and 4.5 percent for 2012.

For Britain,the forecast is also grim.Pointed at as one of the vulnerable areas to slip back in recession,it said the UK was now expected to expand by just 1.1 per cent in 2011 rather than the 1.5 per cent it had predicted in June and the 1.7% forecast by George Osborne in his March budget.

As Jeremy Warner has just posted on the Telegraph site,

We’ve known for a long time that this is no ordinary recession. Everyone has been saying it, including the International Monetary Fund. Yet there has been a curious reluctance to admit the likely reality of slow growth and insipid recovery for advanced economies in the official forecasts. Well now the International Monetary Fund has finally capitulated and gone some way to recognising the truth.