Britain's recession will be deepest, IMF warns

London, Jan.29 (ANI): Britain's recession will be deeper than any other major country this year, the International Monetary Fund warned today as the banking crisis continues to send shudders through the rest of the economy. British gross domestic product will contract 2.8pc this year, a sharper and more painful decline than the IMF now forecasts for America, the Eurozone or Japan.

The new forecast compares with a prediction of a 1.3pc decline made in November.

The new forecast deals a blow to Prime Minister Gordon Brown who has insisted that the UK is no more exposed to the sweeping global downturn than other economies.

Critics have argued that the intensity of the decade-long housing boom, a failure of regulation and the size of losses accumulated by UK banks have left Britain deeper in the mire.

The IMF expects the US economy - where the sub-prime crisis began - to contract 1.6 percent; Japan to shrink 2.6 percent and the Eurozone to decline 2 percent.

Overall, the IMF expects the global economy to expand 0.5 percent - its weakest showing since the Second World War.

Economists at the IMF also estimated that bank losses might reach 2.2 trillion dollars, almost twice the 1.4 trillion dollars the organisation predicted in October.

The report warned today that: "unless stronger financial strains and uncertainties are forcefully addressed, the pernicious feedback loop between real activity and financial markets will intensify, leading to even more toxic effects on global growth." (ANI)