October 4, 2016

CREMATING REMAINS:

IMF eats humble pie over Brexit claims, admits UK GDP will grow after all (Gaurav Sharma, October 4, 2016, IB Times)

Prior to the 23 June referendum, the IMF had claimed a potential Brexit would plunge the UK into recession and lead to a crash in the equities market. While chances of a recession appear to be receding, the FTSE 100 capped an all-time high of 7,010 points on Tuesday (4 October).

In its latest update to the market, the IMF said it expects the UK economy to grow by 1.8% in 2016, marginally higher than its forecast of 1.7% in July.

The revision puts the country on track to be the fastest-growing G7 economy this year. Explaining its decision, the fund said measures taken by the Bank of England following the Brexit vote, including cutting interest rates by 25 basis points to 0.25% and freeing up more cash for banks to lend, had helped "maintain confidence" in the economy.

However, the IMF insisted that the UK's decision to leave the EU would in all likelihood exert a permanent drag on long-term growth, as it predicted that the Government would not balance the books until at least 2022.

Posted by at October 4, 2016 2:00 PM

  

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