The crisis-torn eurozone faces a weak future, the International Monetary Fund said yesterday in a devastating analysis.

The single currency area is now at a critical point amid ‘flagging faith’ in the bloc, it warned.

In a withering assessment, it also said the refugee crisis could trigger the end of free movement and sounded the alarm over growing levels of Euroscepticism following the Brexit vote.

The IMF said: ‘The euro area is at a critical juncture. Muddling through is increasingly untenable.’ It added: ‘Unless collective problems are solved, the euro area is likely to suffer repeated bouts of economic and political instability leading to crises of confidence and economic setbacks.’

The eurozone is on course for an economic slowdown in the wake of Britain's decision to leave the European Union, according to the International Monetary Fund

The stark message came as:

A Nobel Prize winning economist said Europe may have to ‘abandon the euro’;

An analyst at French bank Societe Generale warned Italy and France could quit the single currency bloc;

Rating agency Moody’s said the future of the entire EU was under threat;

Experts warned banks across Europe were ‘under stress’;

The world’s biggest hotel group predicted that the fall in the pound would lead to a tourist boom for the UK.

The pro-EU IMF said the eurozone is ‘increasingly vulnerable to shocks’ in its damning annual health check on the region.

It said economic growth would slow from 1.6 per cent this year to 1.4 per cent in 2017 ‘mainly due to the negative impact of the UK referendum outcome’.

It warned that within five years the region will still only clock up growth of 1.5 per cent, which could ‘undermine the recovery and raise the likelihood of stagnation’.

The report said the region was being held back by ‘crisis legacies of high unemployment, elevated public and private debt, and deep-rooted structural weaknesses’.

It added: ‘The medium-term outlook remains weak and is endangered by a lack of collective action to address common challenges.’ Unemployment in the eurozone is 10.1 per cent, compared to 5 per cent in the UK. The figure is 19.8 per cent in Spain and 24.1 per cent in Greece, where economic turmoil has led to civil unrest.

The IMF warned of ‘banking and financial sector weakness’ – highlighted by the crisis engulfing lenders in Portugal and Italy and a share price collapse at Deutsche Bank. Swedish MEP Gunnar Hokmark said ‘the whole banking system [is] under stress’.

Filipe Garcia, a financial expert and consultant in Portugal, said: ‘Wherever you look, there is a threat or a risk.’ The IMF said the eurozone is now under threat from growing Euroscepticism in countries including France, Italy and the Netherlands following Britain’s vote to leave the EU.

It also warned that ‘an intensification of the refugee surge could prompt additional border controls and hinder free movement within the single market’. The migrant crisis has already seen border controls reintroduced – leaving the EU’s passport-free travel zone on the brink of collapse.

The IMF called on EU countries to ‘rapidly integrate refugees’ and urged reform of ‘common border and asylum policy to protect social cohesion and preserve the single market’. Noting ‘stark political divisions’ across the region, it said: ‘The EU should redouble efforts to ensure the benefits of economic integration and thus rebuild flagging faith in the monetary union.’

Nobel Prize-winning academic Joseph Stiglitz, a former chief economist at the World Bank and adviser to Bill Clinton, said the euro is at the root of many of Europe’s problems. In a new book, he says the currency was flawed at birth and instead of bringing prosperity to the region is now threatening to tear it apart.

He says adopting a single currency in 1992 was a ‘fatal decision’ and said ‘an amicable divorce would be far preferable to the current approach of muddling through’.

Albert Edwards, of French bank Societe Generale, said: ‘It is only a matter of time before the eurozone project fractures.’ Ratings agency Moody’s said the rise of ‘nationalistic and protectionist movements’ could threaten its existence.

Sterling has fallen around 10 per cent against the euro since the Brexit vote. Richard Solomons, of Holiday Inn owner InterContinental Hotels, said it would boost tourism. ‘It is clearly very early days, but the low pound means that we’re likely to see an increase in in-bound travel,’ he said.

Britain's booming... Manufacturing up as China eyes trade deal: Recovery in far better shape than first thought after industry clocks its fastest growth rate for six years

Britain’s economy has picked up pace despite doom-laden warnings over the prospect of Brexit.

Figures yesterday showed the recovery is in far better shape than feared with industry clocking up its fastest rate of growth for six years.

Industrial production rose by 1.9 per cent in the three months to May, according to the Office for National Statistics – the strongest performance since the three months to May 2010.

And in a sign that Britain can prosper outside the EU, an Indian business leader described a trade agreement with the UK as a deal ‘almost made in heaven’.

Britain’s economy has picked up pace despite doom-laden warnings over the prospect of Brexit

Chinese officials have also made encouraging noises, claiming the Brexit vote has made a trade deal with Britain more likely.

The economy looks set to get a further boost next week with analysts saying there is a near 80 per cent chance that interest rates will be cut once again.

Rates have been at a historic low of 0.5 per cent since March 2009, but it is now thought the Bank of England will cut them to 0.25 per cent on Thursday to keep the economy moving.

Talk of rate cuts came as the FTSE 100 index rose 1.1 per cent yesterday and government borrowing costs hit a record low, in a sign that international investors still have faith in the UK following Brexit.

The Government borrowed £2.25billion for ten years and will pay less than 1 per cent a year.

‘The prophets of doom have run out of steam today,’ said David Buik, market analyst at stockbroker Panmure Gordon.

The National Institute of Economic and Social Research said gross domestic product – the total size of the economy – increased by 0.6 per cent in the second three months of the year.

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That marks an improvement on the 0.4 per cent expansion seen in the first quarter of 2016 – allaying fears that uncertainty over the EU referendum damaged the UK economy.

The reports will ease concerns that the economy is heading for the rocks. Edward Firth, an analyst at investment bank Macquarie, said: ‘We are highly sceptical that being a member of a command and control organisation like the EU offers significant benefits or that departure will throw us straight back to the 1970s.’

But the institute also said that while growth was ‘robust’ in the second quarter it expects a ‘quick deterioration’ in the coming months.

And in a report published today, research group GfK warns that consumer confidence has fallen at its fastest pace for 21 years following the Brexit vote.

However, Naushad Forbes, president of the Confederation of Indian Industry, said negotiations over an India-EU trade agreement, which had lasted for nine years, were being held up by concerns about European exports of wine and cars.

But those problems would be removed if the UK negotiated its own arrangement after leaving the EU. ‘It would be an agreement that would be almost made in heaven,’ he said.

Zing Houyan, an official from the state-backed Chinese Academy of International Trade and Economic Cooperation, said China was being frustrated by the EU.

But now Britain is leaving the EU the ‘situation in Western Europe will push China and the UK to make a trade treaty’, he said.

Trade Minister Lord Price said on Wednesday that Brexit could herald a ‘second Elizabethan Golden Age’ of trade and investment.

Figures yesterday showed the recovery is in far better shape than feared with industry clocking up its fastest rate of growth for six years

Could Brexit save Port Talbot? Sajid Javid in India for talks with Tata bosses as steel giant rethinks sale of UK assets after fall in value of the Pound

Sajid Javid has held talks with Tata executives in India amid mounting speculation that the steel giant could hold on to the key Port Talbot plant.

The firm rocked the government in March by announcing that it was planning to sell off loss-making assets including the huge site in Wales.

The dumping of cheap Chinese steel on the market was blamed for destroying the economic viability of the operations.

However, steel prices have crept up again recently and the fall in the value of the Pound since the Brexit vote in the referendum has made exports more attractive.

Business Secretary Sajid Javid has been in Mumbai for talks with Tata executives today. There is speculation the firm could now hold on to the Port Talbot plant

The firm looks set to confirm that it will sell its speciality steel business, which employs 2,000 workers in Hartlepool, Rotherham and Stocksbridge.

However, the two blast furnaces at Port Talbot and a dozen other locations, which have around 9,000 staff, could be maintained.

An announcement could be made later today.

Mr Javid met senior Tata board members in Mumbai today during a visit to India to discuss future trade links following the UK vote to leave the EU.

He is also visiting Delhi as part of efforts to drum up trade with economic powers outside of the Brussels club.

He said: 'Following the referendum result, my absolute priority is making sure the UK has the tools it needs to continue to compete on the global stage.

'That is why I am in India today to launch these initial trade discussions.

'There is a strong bilateral trade relationship between our two countries and I am determined that we build on this.

'Over the coming months, I will be conducting similar meetings with other key trade partners, outlining the government's vision for what the UK's future trade relationship might look like.'

Mr Javid said he wanted to launch trade talks with India in the wake of Britain's decision to leave the EU

Tata has been assessing several bids for weeks after announcing earlier this year that it was selling its loss-making UK business.

Unite warned Tata against 'walking away' from Port Talbot in a few years' time after leaving it to 'wither on the vine'.

National officer Harish Patel said: 'The cloud of uncertainty over steelworkers' heads needs to be lifted by Tata giving binding commitments about its long-term intentions regarding Port Talbot and its UK strips business.

'If Tata is to retain the goodwill of the workforce then its board needs to give guarantees over Port Talbot and assurances that it won't conduct a fire sale of its speciality and tubes business.

'Port Talbot and the UK strips business can have a viable and profitable long-term future with the right investment.

'They have a world-class workforce making world-beating products.

'Unite will be pressing Tata for clarity over its intentions and ensuring it sticks to its promise to be a responsible seller and act ethically.'