By Simon Miller
The International Monetary Fund is to downgrade global GDP growth from 4% to 3.3% thanks to ongoing tensions in the eurozone according to a leaked draft of its World Economic Outlook.
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The draft, which was obtained by Italian news agency ANSA, said the global recovery was “threatened by the growing tensions in the euro area”.
The eurozone will see growth shrink by 0.5%, revised down from a 1.1% growth in September’s forecast while Italy’s economy will contract by 2.2% and Spain’s by 1.7%.
Britain will see 0.6% of growth before rebounding to 2% in 2012 while the US remains unchanged a 1.8% while China will grow by 8.2%, down from 9%.
"The most immediate political challenge is to re-establish confidence and put an end to the euro area crisis, supporting growth," said the draft.
Greece stands before a default abyss but, as Simon Miller discovers, before it rushes to restructure, there are litigating risks from international trade treaties to considerRatings watch euro-countries need €1trn in debt sales
More than half the debt needed to be borrowed in the eurozone in 2012 will be from countries facing rating downgrades according to Fitch Ratings.
UK joins 11 on EU economic watch
The UK has suffered the worst decline in share of exports in the last five years in the European Union according to the first EU Alert Mechanism Report.
The report, which aims to prevent future eurozone crises, said the UK saw its share of exports down 24.2% over the last five years at a time of soaring public debt.