The International Monetary Fund (IMF) has cut its 2011 growth forecast for the UK economy to 1.75%, its third downgrade in a year.

The cut cements the widely held view that Britain faces a year of low growth and rising unemployment with little prospect of a job-creating recovery until later in 2012. It will increase the pressure on the chancellor, George Osborne, to boost Britain's growth prospects.

The Washington-based agency said on Monday in its half-yearly World Economic Outlook that its lower growth target, down from 2.1% last April, was the result of the UK's "necessary" front-loaded fiscal consolidation which will dampen domestic demand.

Officials at the IMF have immersed themselves in analysis of the financial crisis and the best way for countries to recover after failing to warn of the housing bubbles in the US, UK and other parts of Europe prior to the banking crash.

In a broadly positive review of the global economy, which said that growth would be maintained, albeit at a slower pace, the IMF sounded several warning notes, not least that governments with half-hearted public spending cuts were undermining efforts towards longer-term sustainable growth.

The report warns that the downside risks to UK growth have increased as the potential for policy mistakes in the eurozone have risen. The cost of oil and other raw materials, which have jumped 32% over the last year according to the IMF's own index, also pose extra risks.

It said further sovereign debt problems could hit confidence in the eurozone, which is likely to be read as a warning that failure to strike a deal over the Portugal bailout could be catastrophic for growth.

The IMF backs further integration of policies and regulations inside the eurozone to prevent further arguments over fiscal rules and the extent to which individual countries can overspend.

Dominique Strauss-Kahn, the head of the organisation, has worked with the European commission in orchestrating the bailouts of Ireland and Greece, with the IMF putting up a large proportion of the loans for each country. It is expected the IMF will be back in action once a deal is hammered out by EU finance ministers on the terms of Portugal's sovereign debt refinancing.

Strauss-Kahn, who is considering running for the socialist nomination for the French presidency when Nicolas Sarkozy's first term ends next year, is concerned that cuts in public spending have been pursued at the expense of initiatives to improve growth and create jobs.

Several times in the report the IMF says the likelihood is that the UK and other developed countries will see rising unemployment this year with the potential for social unrest increasing. Developing nations, which have huge numbers of young people, will also be badly affected.

"Unemployment poses grave economic and social challenges, which are being amplified in emerging and developing economies by high food prices," it says.

"The young face particular difficulties. Historically, for Organisation for Economic Cooperation and Development countries the unemployment rate for young people aged 15 to 24 has been about two and a half times the rate for other groups.

"Though youth unemployment typically increases sharply during recessions, the increase this time was greater than in the past: in a set of eight countries for which long time-series of youth unemployment are available, the increase averaged 6.5 percentage points during the great recession, compared with four percentage points in previous recessions," it says.

Unemployment among Britain's 16-to-25-year-olds was 974,000 last month and is expected to exceed the politically sensitive 1 million mark on Wednesday when official figures are published.