IMF says its 'gloomy' post-Brexit forecast for UK economy has been proven right

The International Monetary Fund has defended its "gloomy" outlook for the UK's economy following the decision to leave the EU, as it downgraded the UK's 2017 growth forecast from 1.7% to 1.6%.

Speaking in London, the IMF's managing director Christine Lagarde cited Brexit for Britain's inability to keep pace with a strong recovery in global growth.

The growth forecast of 1.6% for 2017 is down from 1.8% in 2016 and 2.3% in 2015.

Lagarde said the updated figures justified what has been described as the IMF's "gloomy" predictions about the effects of quitting the European Union.

Credit: PA

The IMF has stood by its forecast of an even lower level of growth in 2018, at 1.5%.

The Washington DC-based organisation also warned that Britain's divorce from the European Union could force the Government to consider further cuts to public spending, as it grapples with a potential loss of tax revenues from the financial sector and slower productivity growth.