By Marcus Leach

The International Monetary Fund have lowered their forecasts for many developed countries, including the UK.

The IMF's twice-yearly review of the world economy, the World Economic Outlook, has suggested that world growth would now be 3.3% for the year, down from 3.5% forecast six months ago.

For the UK, it is forecasting growth of just 0.7%, after saying a month ago that the country's economy could expect 1% growth. The figure is slightly above the 0.6% growth forecast in last month's Budget.

"In the United Kingdom, the recovery is progressing slowly, notably in the context of weak external demand and ongoing fiscal consolidation," the IMF's report said.

"Greater near-term flexibility in the path of fiscal adjustment should be considered in the light of lacklustre private demand."

The report also cut its forecast for the eurozone, from 1.2% to 0.3%, with Germany, the strongest economy, expected to grow by 0.6%, but France on course to shrink by 0.1%.

“With recent data from our business surveys suggesting that growth at the beginning of this year was broadly flat, it’s not surprising that the IMF has lowered its forecast," Stephen Gifford, CBI Director for Economics, said.

“Consumers are being squeezed by high inflation and low wages and business confidence remains unsettled, so the pace of growth is expected to be muted through 2013.”

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