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UK will be fastest growing G7 economy this year, says IMF

Staff Writer |
The International Monetary Fund (IMF)has predicted the UK will be the fastest growing of the G7 country this year, backtracking on its prediction that Brexit will lead to a financial crisis.

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In the fund's latest World Economic Outlook, the global financial watchdog forecast the UK economy to grow by 1.8% in 2016, which is higher than its July forecast of 1.7%.

It does however still believe the economy will eventually suffer from the shock of the EU referendum result, marking down its prediction for 2017 to 1.1%, from a forecast of 1.3% in July and 2.2% in April.

By way of comparison, the US economy was expected to expand by 2.2% in 2017 and that of Germany by 1.4%.

Financial markets reaction to Brexit was "generally contained", aside from the depreciation in the pound, with shares up and investors recovering after the initial dip, according to the report.

The "sharp retrenchment" in manufacturing seen immediately after the referendum result was also followed shortly by a "rebound" in activity.

The surveys of the sector actually suggested that UK factories had their best quarter this year following the vote. Retail sales had also "held up" after the vote.

Following the Brexit vote, the Bank of England cut bank rate and freed up more cash for banks to lend, which helped to "maintain confidence" in the economy according to the IMF.

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