Global economy ‘more likely to get worse than better’, head of IMF warns

THE global economy “is more likely to get worse than better” the head of the International Monetary Fund has warned.

Kristalina Georgieva, 69, said even when countries are out of a recession people will still feel worse off because of “shrinking real incomes and rising prices”.

Her warning came as Chancellor Kwasi Kwarteng told Britain’s banks he would work closely with them amid rising mortgage costs and the rapid withdrawal of home loans from the market.

Average mortgage rates have now risen above six per cent for the first time in 14 years, costing homeowners on variable rates thousands more a year.

Banks pulled mortgage products because they were unable to price them against government bonds, which had a huge sell-off after the mini-Budget.

The UK has lost £300billion in Liz Truss’s first month as PM, according to Bloomberg.

At a meeting with bosses of NatWest, Lloyds, HSBC, Santander and TSB yesterday, Mr Kwarteng said that he was considering extending the mortgage guarantee scheme.

It would help to keep 95 per cent mortgages available and means the Government partly insures banks from losses if a home is repossessed.

But some economists warn it could raise house prices even further.