Housing slump to drive recession, IMF warns

Britain’s crashing housing market will be a major factor driving the country towards its first recession in almost 20 years, the International Monetary Fund (IMF) has warned.

In its half-yearly world economic outlook, the IMF slashed its growth forecast for 2009 from 1.7% to -0.1%.

It predicted the slumping housing market, coupled with the vulnerability of the City and the poor state of public finances will cause a recession next year, reported the Guardian.

It also claimed the government’s bail out of banks will take time to work and that Britain would be the second worst performing country ahead of Italy in the G7 group of industrial countries next year.