Britain warned that it is heading for double dip recession

The International Monetary Fund has issued a warning to the UK that a second recession may be just around the corner, with the economy stagnant and little growth predicted.

The organisation's six monthly report also describes the global financial position as 'weakening significantly' pointing to 'policy indecision' from ministers as significantly contributing to the problem.

The World Economic Outlook report issued by the IMF, has described the UK as having a one in six chance of slipping backwards into a recession, as the country struggles to cope with a variety of economic factors. Even if Britain manages to escape a second credit crunch the IMF believes that its growth will be severely stunted over the coming months and has downgraded its predictions for both 2011 and 2012.

By the end of this year, the IMF has forecast that the UK economy will have grown by just 1.1%, less than their initial prediction of 1.5%. The short term future is not looking much rosier either according to the IMF, with the forecast for 2012 being pushed down to 1.6% from 2.3%.

Last time the IMF made predictions of this magnitude was in 2008 before the recession struck the country. At the time, the IMF predicted the economy would contract by 0.1% in 2009 but the actual figure was far higher – 4.9% - leaving many experts speculating what will arise in the UK this time around.

The government has stoically left its growth predictions at 1.7% for 2011 but the Chancellor has admitted that there will be no choice but to lower the forecast when it is next assessed.

However, it is not just the UK which is being targeted by the IMF. The USA has also been pinpointed as a country likely to suffer from limited growth with predictions also downgraded to 1.5% for 2011 and only marginally higher in 2012, at 1.8%.

The newly-appointed head of the IMF, Christine Lagarde, has repeated warnings about countries opting for tough austerity measures, a move which she believes could stimulate another recession. The IMF has urged both the US and European leaders to take rapid action to stop growth slowing even further and causing a double dip recession.

The IMF also highlighted the drawn out problems Europe has experienced with sovereign debts, describing the problems as being 'much more tenacious than expected.' The issues in the banking sector were also included in the IMF report, which also pointed the finger at politicians' inability to take decisive action as making things worse than necessary.

Japan was also cited as a factor in the state of the current global economy with manufacturing adversely affected, whilst the unrest in the Gulf region causing spiralling oil prices was blamed for wiping as much as 0.05% off developed nations' growth between April and June 2011.

Despite the morose tone of the report, the IMF did have some slightly cheerier predictions to make, suggesting that activity levels in Japan will help to trigger an improvement in the global position, whilst oil and food prices are both forecast to drop, helping to stimulate growth.

In a separate report, the chief of the World Bank, Robert Zoellick, has warned that the international financial debts are starting to crush emerging nations and has urged ministers with more advanced economic infrastructures to 'take co-operative action' to minimise the impact.

Mr Zoellick described the impact that the financial problems in both Europe and the US are having on developing countries, with many at real risk of seeing their population also consumed by a lack of confidence, adding that this was a 'new and larger risk.'

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