IMF slashes UK growth forecast on eurozone fears

The International Monetary Fund (IMF) has slashed its growth forecasts for a number of major European economies for 2012 due to ongoing concerns about the region's recovery.

Its growth forecast for the UK has been cut to 0.6% from 1.6%. Germany is now predicted to grow just 0.3% in 2012, down from the 1.3% originally predicted in September, while France is expected to show 0.2% growth in 2012, down from 1.4%.

The world's economy is "deeply into the danger zone" because of risks from the eurozone, the IMF said.

It predicts the global economy will grow by 3.25% in 2012, down from an earlier forecast of 4%.

In light of the IMF's outlook for the UK, Shadow Chancellor Ed Balls said the government may have to rethink its austerity measures.

"Last year the IMF was clear that if growth undershot expectations then the British government should reconsider the pace of spending cuts and tax rises which choked off our recovery well before the recent eurozone crisis.

"Now the IMF has slashed their growth forecasts and confirmed that growth in Britain will indeed be much lower than they expected. And they have called on countries with low interest rates, like the UK, to reconsider the speed of their spending cuts and tax rises."

The government said the figures were not unexpected because they matched those of the independent Office of Budget Responsibility.

Despite its gloomy outlook for most of the world, the IMF said it stands by its 1.8% growth prediction for the US, based on recent strong domestic data on jobs and manufacturing.