IMF: UK to be worst hit in global economic downturn

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The International Monetary Fund (IMF) has warned that the UK faces its most severe economic downturn since the collapse of the early 1990s.

In its latest bi-annual World Economic Outlook report, the IMF predicted that the UK will be the worst hit out of the world’s leading rich economies, due to the ongoing financial turmoil and falling house prices which the nation has experienced in the last 12 months.

The global economy is up against the most threatening crisis since the 1930s warned the report.

The IMF has downgraded Britain’s prospects and expects the economy to grow by 1% this year, while in 2009, the British economy is forecast to shrink by 0.1%, according the IMF.

The organisation also predicts that world economic growth will slow drastically this year, and improve modestly later in 2009.

According to the IMF, the global financial crisis, which started with the collapse in US sub-prime mortgages in August last year, had deteriorated in the last six months and entered a ‘tumultuous new phase‘ last month.

Action needs to be taken by Governments to keep a lid on inflation, warns the IMF and it is calling on Governments to co-ordinate their actions and added that measures taken to deal with the problems should send a strong signal to improve market confidence.

Its report coincides with this week’s IMF-World Bank meeting in America, which will see finance ministers and economic experts come together from around the globe.

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