The International Monetary Fund has strongly defended its gloomy forecasts for the UK after Brexit, saying pre-referendum warnings of slower growth were coming true.
IMF declared that the exit of UK from the EU is the greatest danger on its economy. In its report on Wednesday, the Fund assured that in case a progress was made in negotiations then this would reinforce trust in the British economy, and in case they failed then this might lead to an unorganized exit from EU, and therefore a collapse in European capital markets.
Since the turn of the year, Lagarde said activity had slowed notably and the UK’s recent performance was a disappointment in the light of the best showing by the global economy since the financial crash.
The IMF’s latest forecast suggests that the UK’s medium-term potential productivity growth is only 1.5, similar to 2017.
Lagarde pointed out that the British economy is affected with the electorates decision, last year, to exit the EU and the government decision to move on with the separation decision.
The Fund stressed that UK is facing uncertainty because it is beginning an ambitious mission to negotiate on the exit from the EU, warning that despite the progress achieved by the UK in talks, but there is still a risk of not reaching a final deal.
Talks include agreeing on a trade deal with the EU and negotiating on new arrangements with around 60 countries to discuss agreements in which UK was a member of during its membership in the EU.
British Prime Minister Theresa May said that UK will exert best efforts to protect the position of London as the globally biggest financial center, during talks of separation from the EU.