The International Monetary Fund has revised up its growth forecast for the UK this year, but pencilled in a downgrade for 2018 as the fund expects the economic pain of Brexit to be delayed rather than avoided.

A Treasury spokesperson said: “The fundamentals of the UK economy are strong, and today’s IMF forecasts confirm their view that the UK was the fastest-growing major advanced economy last year.”

The 2017 forecast is roughly in line with the forecasts of the Bank of England and the Office for Budget Responsibility, which both project growth of 1.4 per cent this year.

The IMF noted that growth in the UK since the Brexit referendum has “held up better than expected”.

Christine Lagarde, the IMF’s managing director, had warned before the vote that the possible economic consequences ranged from "pretty bad, to very, very bad" and flagged the possibility of a technical recession.

Brexit pain postponed

IMF WEO

In October, Ms Lagarde insisted it was the IMF’s job to point out economic risks as it saw them.

And Maurice Obstfeld, the IMF's chief economist, on Monday continued to flag dangers ahead for the UK.

“Britain’s terms of exit from the European Union remain unsettled and the upcoming national electoral calendar is crowded, with possibilities of adverse economic repercussions, in the short and longer terms,” he said.

The ONS says UK GDP grew by 0.6 per cent in the third quarter of the year and surveys suggest growth of 0.5 per cent in the final three months. That would take full year growth to around 2.1 per cent.

Prime Minister Theresa May is expected to trigger the two-year Article 50 divorce proceedings in March.

The OBR is projecting quarterly growth to slow to 0.3 per cent in the first quarter and 0.2 per cent in the second quarter.

Notwithstanding the IMF's forecast slowdown, the UK's growth in 2017 would be higher than that of Germany (1.5 per cent) and France (1.3 per cent).

Britain's 2018 growth, however, would be slightly lower.

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The IMF on Monday also pencils in a growth upgrade for the US in 2018 in anticipation of fiscal stimulus from the Trump administration.

It now expects growth in the world's largest economy to be 2.5 per cent next year, up from 2.1 per cent previously.

But the IMF stressed the uncertainty around what would materialise.

“At this early stage ... the specifics of future fiscal legislation remain unclear, as do the degree of net increase in government spending and the resulting impacts on aggregate demand, potential output, the Federal deficit, and the dollar,” said Mr Obstfeld.