- International Monetary Fund believes a revolt could lower living standards
- Ongoing weak growth is breeding ‘negative economic and political forces’
- IMF slashed the 2017 growth forecast for the UK in half since pre-Brexit
- World leaders urged to work with poorer countries to encourage growth
Brexit could be the start of a worldwide revolt that threatens to lower living standards, experts have warned.
The International Monetary Fund has updated its global economic outlook, suggesting governments should do more to address the resistance to globalisation and technological advance in developed countries.
An ongoing weak growth is breeding ‘negative economic and political forces’, according to the organisation, which has slashed its 2017 growth forecast for the UK further from 2.2 percent pre-Brexit to 1.1 percent.
Maurice Obstfeld, the IMF’s chief economist, told The Times: ‘Growth has been too low for too long and in many countries its benefits have reached too few – with likely repercussions that are likely to depress global growth further.
‘Brexit is only one example.
‘The result in some richer countries has been a political movement that blames globalistaion for all woes and seeks somehow to wall of the economy from global trends rather than engage cooperatively with foreign nations.’
The drop in growth forecast was attributed to the vote ‘weighing on investment, hiring decisions and consumers’ decisions’, said Mr Obstfeld.
But this year, the IMF raised the UK’s growth forecast to 1.8 percent, up from 1.7 percent.
This would make the UK the fastest growing economy in the G7 nations – US, Canada, France, Germany, Italy, Japan, and the UK.
Should the predictions materialise, the UK would drop to the fifth fastest next year.
The lift is said to be down to a better-than-expected start of the year ahead of the referendum in July.
The UK’s status was also given a helping hand by slow US growth which saw the IMF pin back its forecast from 2.2 percent to 1.6 percent.
Next year’s growth forecast for the US was also downgraded from 2.5 percent to 2.2 percent for 2017.
Britain’s economy, though, is set to worsen in the long run with the IMF downgrading its estimate of the country’s rate of growth from 2.1 percent to 1.9 percent after the Brexit vote, saying, ‘as greater impediments to trade, migration and capital flows are expected to erode growth potential’.
Chancellor Philip Hammond was dealt a body blow with an anticipated slump in revenue from taxes due to the weaker growth.
He was advised to borrow more in order to reverse the trend.
‘The need for further near-term discretionary fiscal policy easing and the appropriateness of the medium-term deficit target should be accessed, possibly in the context of the upcoming November fiscal review,’ the IMF said.
The treasury has hinted at infrastructure spending next month, but the IMF estimates the country will still have a 0.7 percent budget deficit in 2021 – equating to about £12billion.
It is expected the UK will be running a surplus by 2019 and paying off £10billion of the national debt in 2021.
IMF’s forecasts for global GDP growth has remained unchanged since July at 3.1 percent for this year and 3.4 percent for next year.
But it warned a number of things could derail the recovery, including a crisis in China, higher market interest rates, a fall again in commodity prices or a ‘sharp hike in trade barriers’.
One lingering threat that doesn’t show signs of ceasing is the political tensions strangling the Middle East and Africa.
IMF concluded it expects inflation to hit 2.5 percent in 2017 and that interest rates will remain low in the UK, Europe and Japan.
Read more: http://www.dailymail.co.uk/news/article-3822944/Brexit-just-start-worldwide-revolution-against-globalisation-warns-IMF.html#ixzz4MDIXHs00
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