LONDON, Nov. 13 (Xinhua) -- The International Monetary Fund (IMF) Monday morning downgraded its forecast for GDP growth in Britain to 1.7 percent for this year.
This marks a 0.3 percentage point reduction in growth expectations for Britain this year from the IMF, which had forecast in its last major report on the European economies in April that the British economy would grow by 2 percent.
The growth forecast showed that Britain had bucked the trend in the rest of Europe, where the IMF had increased its forecast of growth, already at 1.9 percent, by 0.5 percentage points.
"We have revised our growth forecasts for Europe as a whole upwards to 2.4 percent for 2017, from 1.9 percent last April. For the UK, however, we have revised down to 1.7 percent for 2017, from 2.0 percent," Joerg Decressin, deputy director, IMF European Department told Xinhua.
Decressin said that the uncertainty over the outcome of the Brexit process, set into motion by British Prime Minister Theresa May in March following a referendum vote to quit the European Union (EU) in last June, had weighed on the country's economic growth.
"Now the impact seems to come through. Consumption and investment are weaker than we expected," said Decressin.
The British central bank, the Bank of England (BoE), had introduced several emergency measures in August 2016 to stimulate the economy, including a 25-basis point cut in the bank rate to a record low of 0.25 percent.
Decressin said this had been effective. "The vote on Brexit initially had a smaller impact on growth than has been expected, thanks to a strong monetary policy response."
The divergence in fortunes between the overall European economy and the British economy was due to several factors, with the most important being the Brexit effect.
"A variety of factors could be at play, but the Brexit vote and related prospects are key to understanding the difference between European and UK growth revisions," said Decressin.
However, the strength of the overall European economic growth and that of the eurozone within it, is good news for the British economy.
The EU is Britain's most significant export market, with 43 percent of exports going there, so acceleration in the rate of growth will provide a boost even in Britain.
Decressin said: "The upward revisions are certainly a good news story for Europe. They are also good news for the UK because they mean that European households will consume more, European firms will invest more, and this will lead them to demand more goods and services from the UK."