The International Monetary Fund (IMF) has slashed its growth forecasts for the UK as it warned that the global economy is in a "dangerous new phase".
The UK will see gross domestic product (GDP) grow 1.1% in 2011, compared with the IMF's last World Economic Outlook report in April of 1.7%, and by 1.6% in 2012, compared with 2.3%.
The forecasts for the UK in 2011 fall behind projections for Germany, France, the US and Canada.
The IMF, now led by former French finance minister Christine Lagarde, warned that the forecasts were dependent on the eurozone debt crisis being contained and US policymakers balancing support for the economy with fiscal tightening.
The downgrade is the latest blow to the UK's recovery prospects after the influential think-tank OECD cut its estimate for growth amid a raft of a disappointing economic data.
However, the gloomy outlook is unlikely to deter Chancellor George Osborne from his tough programme of spending cuts and tax reform as the IMF has previously given full backing to his austerity measures.
Ms Lagarde earlier this month said the UK's stance remained "appropriate" but "the heightened risk" meant a need for a "heightened readiness to respond".
The Chancellor's deficit reduction plans have been challenged by business leaders, economists and opposition politicians in recent months as the economic outlook for the UK deteriorates.
But Mr Osborne is determined to continue with the austerity measures laid out last October in his Comprehensive Spending Review, which he has labelled "the rock of stability" on which the economy is built.
John Hawksworth, chief economist at professional services firm PwC, said: "Downside risks have risen significantly in recent months so it would be wise for both governments and businesses to develop contingency plans in case such as double dip scenario does emerge. These new IMF projections certainly support our recent argument for more quantitative easing in the UK sooner rather than later."
The International Monetary Fund (IMF) has slashed its growth forecasts for the UK as it warned that the global economy is in a "dangerous new phase".
The UK will see gross domestic product (GDP) grow 1.1% in 2011, compared with the IMF's last World Economic Outlook report in April of 1.7%, and by 1.6% in 2012, compared with 2.3%.
The forecasts for the UK in 2011 fall behind projections for Germany, France, the US and Canada.
The IMF, now led by former French finance minister Christine Lagarde, warned that the forecasts were dependent on the eurozone debt crisis being contained and US policymakers balancing support for the economy with fiscal tightening.
The downgrade is the latest blow to the UK's recovery prospects after the influential think-tank OECD cut its estimate for growth amid a raft of a disappointing economic data.
However, the gloomy outlook is unlikely to deter Chancellor George Osborne from his tough programme of spending cuts and tax reform as the IMF has previously given full backing to his austerity measures.
Ms Lagarde earlier this month said the UK's stance remained "appropriate" but "the heightened risk" meant a need for a "heightened readiness to respond".
The Chancellor's deficit reduction plans have been challenged by business leaders, economists and opposition politicians in recent months as the economic outlook for the UK deteriorates.
But Mr Osborne is determined to continue with the austerity measures laid out last October in his Comprehensive Spending Review, which he has labelled "the rock of stability" on which the economy is built.
John Hawksworth, chief economist at professional services firm PwC, said: "Downside risks have risen significantly in recent months so it would be wise for both governments and businesses to develop contingency plans in case such as double dip scenario does emerge. These new IMF projections certainly support our recent argument for more quantitative easing in the UK sooner rather than later."