IMF downgrades UK growth while European rivals surge

The International Monetary Fund has lowered its growth forecast for the UK to 1.7% for 2017.

The organisation said a weaker-than-expected performance meant it was revising expectations from the 2% it predicted in April.

The US also had its economic forecast downgraded to 2.1% from 2.3%.

It comes in contrast to major European countries including Germany, France, Italy and Spain, where growth exceeded expectations.

Germany has been revised up by 0.2 points to 1.8%, France by 0.1 points to 1.5%, while Italy and Spain have both been revised up by 0.5 points to 1.3% and 3.1% respectively.

The IMF's prediction that the global economy will grow by 3.5% in 2017 and 3.6% in 2018 remains unchanged, driven largely by China, Japan and the EU.

The Treasury said the report showed why securing the "very best deal" on Brexit with the European Union was "vitally important".

But it insisted "the fundamentals of our economy are strong".

A spokesman said: "This forecast underscores exactly why our plans to increase productivity and ensure we get the very best deal with the EU are vitally important."

IMF growth forecasts for the UK next year remain unchanged at 1.5%.

Prime Minister Theresa May's spokesman said the IMF's assessment was "one of a number of forecasts".

The spokesman added: "Owing to years of hard work and sacrifice by the public, the UK economy is in a strong position. We have employment at a record high and the deficit down by three-quarters.

"We will continue to deliver greater prosperity and higher living standards for hard-working people across the country."

Labour's John McDonnell said the forecast was "yet another blow for the Government and its continued austerity agenda".

"It further reveals that this Government has no real plan for Brexit and no real plan to deal with the problem of earnings not keeping up with prices, which is undermining growth and risking living standards," the shadow chancellor said.

"Only a Labour government will end austerity and provide the vital programme of investment to boost growth in our economy, underpinned by our fiscal credibility rule, which our country desperately needs."