IMF issues warning to Osborne over austerity drive

The UK economy has been dealt a fresh blow from the International Monetary Fund after it cut its growth forecast for this year and next and warned a lack of growth could derail the chancellor's austerity drive.

The IMF - delivering its biannual outlook on the state of the world economy - cut its estimate for UK growth in 2011 from 1.5% to 1.1%, while 2012's estimate was reduced from 2.3% to 1.6%. While cutting forecasts, it added chancellor George Osborne's deficit reduction programme was under threat by weak growth rates. The IMF said in the event of any further downturn Osborne would have no alternative but to ease the pace of his deficit reduction plan. "There is some evidence that drops in equity prices are associated with a greater chance of a new recession in a number of economies,"...