The International Monetary Fund has cut its global growth forecast for 2012 from 4 per cent to 3.3 per cent due to the escalating debt crisis in the eurozone.
According to The Telegraph, which has seen a leaked draft of its 2012 forecast, the IMF revised its forecast because of “growing tensions in the euro area”.
The report states the UK’s economy will grow by 0.6 per cent next year and will rebound to 2 per cent next year.
Italy’s economy will contract by 2.2 per cent over the next year and Spain’s economy will drop by 1.7 per cent. The eurozone as a whole will shrink by 0.5 per cent, a fall from the 1.1 per cent growth the IMF predicted in September.
The IMF has also encouraged the European Central Bank to continue moving to a“more accommodative monetary policy” to prevent a credit squeeze.