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The world economy is entering a “perilous phase” of low economic growth and high financial risk, the International Monetary Fund has warned in its latest set of assessments.

The IMF, which is holding its spring meetings in Washington this week, downgraded its outlook for global growth and said its medium term forecast for economic output was now at the weakest level since the fund began publishing these forecasts in 1990.

However its chief economist Pierre-Olivier Gourinchas added that there were also more severe risks in prospect.

He said: “We are… entering a perilous phase during which economic growth remains low by historical standards and financial risks have risen, yet inflation has not yet decisively turned the corner.”

“Below the surface,” he added, “turbulence is building, and the situation is quite fragile, as the recent bout of banking instability reminded us.

“Inflation is much stickier than anticipated even a few months ago. While global inflation has declined, that reflects mostly the sharp reversal in energy and food prices. But core inflation, excluding the volatile energy and food components, has not yet peaked in many countries.”

This cocktail of factors prompted the IMF to cut its forecast for global economic growth by 0.1 percentage points this year and next, to 2.8% and 3% respectively.

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Is Brexit to blame? The war in Ukraine? Ed Conway at the end of January taking a look at the IMF predicting the UK economy would end up behind advanced nations this year

However, the fund said that there was now a one-in-four chance of global growth falling below 2% this year, something tantamount to a global recession, and which has only happened five times since 1970 (most recently in 2009 and 2020).

The UK has received an upgrade to its economic growth forecast this year and next, but it is nonetheless forecast to be the worst performing economy in the G7 this year, shrinking by 0.3%. UK gross domestic product is slated to rise to 1% next year.

The fund’s warnings follow the collapse of Silicon Valley Bank in the US and Credit Suisse in Europe, episodes which have raised the prospect of further financial turbulence in the coming months, as the system responds to rising interest rates.

In the World Economic Outlook, Mr Gourinchas referred to the troubles in the UK pensions market following last September’s mini-budget, saying: “The financial instability last fall in the gilt market in the United Kingdom and the recent banking turbulence in the United States with the collapse of a few regional banks illustrate that significant vulnerabilities exist both among banks and non-bank financial institutions.

“In both cases the authorities took quick and strong action and have been able to contain the spread of the crisis so far. Yet the financial system may well be tested again.”

Yet alongside these immediate concerns, there is another worry haunting policymakers as they gather in Washington for this six-monthly set of meetings: that the global economy may have lost some of its mojo.

The decline in the long term global growth rate in this latest forecast is in part down to “benign” factors – among them the fact that countries like China, which have driven global growth for more than a decade, are becoming higher income nations, with an inherently slower growth rate.

Read more business news:
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UK to see return of ultra-low interest rates, IMF says

But the other worry they have is that the world is beginning to deglobalise, with many countries unravelling their supply chains and introducing new trade barriers.

Those barriers, which are rising faster than ever before, could constrict global productivity, implying weaker growth for the long run.

Responding to the IMF statement Chancellor Jeremy Hunt said:

“Thanks to the steps we have taken, the OBR [Office of Budget Responsibility] says the UK will avoid recession, and our IMF growth forecasts have been upgraded by more than any other G7 country.

“The IMF now say we are on the right track for economic growth. By sticking to the plan we will more than halve inflation this year, easing the pressure on everyone.”

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Jaguar Land Rover to ‘pause’ US shipments over Donald Trump tariffs

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Jaguar Land Rover to 'pause' US shipments over Donald Trump tariffs

Jaguar Land Rover (JLR) has said it will “pause” shipments to the US as the British car firm works to “address the new trading terms” of Donald Trump’s tariffs.

The US president has introduced a 25% levy on all foreign cars imported into the country, which came into force on Thursday.

JLR, one of the country’s biggest carmakers, exported about 38,000 cars to the US in the third quarter of 2024 – almost equal to the amount sold to the UK and the EU combined.

Follow live updates: Trump’s baseline 10% tariff kicks in

In a statement on Saturday, a spokesperson for the company behind the Jaguar, Land Rover and Range Rover brands said: “The USA is an important market for JLR’s luxury brands.

“As we work to address the new trading terms with our business partners, we are taking some short-term actions including a shipment pause in April, as we develop our mid- to longer-term plans.”

The company released a statement last week before Mr Trump announced a “baseline” 10% tariff on goods from around the world, which kicked in on Saturday morning, on what he called “liberation day”.

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JLR reassured customers its business was “resilient” and “accustomed to changing market conditions”.

“Our priorities now are delivering for our clients around the world and addressing these new US trading terms,” the firm said.

Trading across the world has been hit by Mr Trump’s tariff announcement at the White House on Wednesday.

All but one stock on the FTSE 100 fell on Friday – with Rolls-Royce, banks and miners among those to suffer the sharpest losses.

Read more: A red wall on Wall Street – but Trump seems to believe it will work out

Cars are the top product exported from the UK to the US, with exports worth £8.3bn in the year to the end of September 2024, according to data from the Office for National Statistics.

For UK carmakers, the US is the second largest export market behind the European Union.

Industry groups have previously warned the tariffs will force firms to rethink where they trade, while a report by thinktank the Institute for Public Policy Research said more than 25,000 car manufacturing jobs in the UK could be at risk.

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Two people die after caravan fire at holiday park in Lincolnshire

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Two people die after caravan fire at holiday park in Lincolnshire

Two people have died following a fire at a caravan site near Skegness, Lincolnshire Police have said.

In a statement, officers said they were called at 3.53am on Saturday to a report of a blaze at Golden Beach Holiday Park in the village of Ingoldmells.

Fire and rescue crews attended the scene, and two people were found to have died.

They were reported to be a 10-year-old girl and a 48-year-old man.

The force said the victims’ next of kin have been informed and will be supported by specially trained officers.

Officers are trying to establish the exact cause of the blaze.

“We are at the very early stages of our investigation and as such we are keeping an open mind,” the force said.

Two fire crews remain at the scene.

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Boy dies after ‘getting into difficulty’ in lake in southeast London

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Boy dies after 'getting into difficulty' in lake in southeast London

A 15-year-old boy has died after “getting into difficulty” in a lake in southeast London, police say.

Officers and paramedics were called shortly after 3pm on Friday to Beckenham Place Park in Lewisham.

The Metropolitan Police said a boy “was recovered from the lake” at around 10.42pm the same day.

“He was taken to hospital where he was sadly pronounced dead. His death is being treated as unexpected but not believed to be suspicious,” according to the force.

The boy’s family has been told and are being supported by specialist officers.

The force originally said the child was 16 years old, but has since confirmed his age as 15.

In the earlier statement, officers said emergency services carried out a search and the park was evacuated.

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google street view inside Beckenham Place park, Lewisham where a 16 y/o boy is missing after getting into difficulty in a lake
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Emergency teams were called to Beckenham Place Park on Friday afternoon

Beckenham Place Park, which borders the London borough of Bromley, covers around 240 acres, according to the park’s website.

The lake is described as 285 metres long, reaching depths of up to 3.5 metres.

It is designed as a swimming lake for open-water swimming and paddle boarding.

A London Ambulance Service spokesperson said on Friday: “We were called at 3.02pm this afternoon to reports of a person in the water.

“We sent resources to the scene, including an ambulance crew, an incident response officer and members of our hazardous area response team.”

Emergency teams have not explained how the boy entered the water, or whether he was accompanied by others.

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