The International Monetary Fund has projected a gross domestic product growth (GDP) of 1.6 per cent for the United Kingdom this year, down from 1.8 per cent last year and 2.3 per cent in 2015, despite a stronger global environment. It expects growth to slow next year to 1.5 per cent as uncertainty over Brexit persists and inflation remains above target.

Rising inflation, caused by the fall in the pound, and stagnant wages are squeezing spending power and UK firms are delaying investment plans due to Brexit-related doubts, IMF chief Christine Lagarde said in London recently.

Though the British Government has made "significant progress" in reducing the deficit, the country’s public debt remains high at 87 per cent of GDP. Continued deficit reduction is, therefore, critical to create further room to respond to future shocks, she said at a press conference.

Relative to growth in the rest of the world, the United Kingdom is losing out as a result of higher inflation, pressure on wages and incomes and delayed investment, she said.

Foreesing significant fiscal pressures for the country over the longer term, she said population aging may lead to material increases in spending on health care, pensions and long-term care, while productivity growth has been slow.

“And a slowly growing economy means fewer resources will be available to meet this increased spending. These challenges are likely to become even more acute if trade barriers further reduce productivity,” she added. (DS)

Fibre2Fashion News Desk – India

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