UK economy expected to shrink this year, says IMF

Washington-based body singles out Britain and euro area as affected by energy costs and inflation

• IMF suggests fight against inflation could risk financial stability

The UK economy is expected to shrink this year and will be at the back of the leading G7 countries at a time when a fresh outbreak of financial upheaval threatens the slowing global recovery, the International Monetary Fund has warned.

Stressing the growing risks of a hard landing for developed countries, the Washington-based body singled out the UK and the euro area as being particularly affected by rising energy costs and higher inflation.