The International Monetary Fund has warned that the UK may lose out in the wake of Brexit, downgrading growth prospects in its latest report.

The IMF now expects growth of 1.6 percent this year, down from its previous forecast of 1.7 percent. Growth is expected to slow further in 2018 to 1.5 percent.

The report highlighted the negative impact of the weak pound on the domestic economy, as well as its effect on UK trade. It said:

“The sharp depreciation of sterling following the referendum pushed up consumer price inflation, squeezing household real income and consumption.

“Business investment growth has been lower than would be expected in the context of strong global growth and high levels of capacity utilisation, owing to heightened uncertainty about economic prospects.”

Christine Lagarde, the IMF’s chief, also said it was clear that the UK was “losing out” from the impact of Brexit.