The International Monetary Fund has cut its forecasts for global economic growth this year and next.

It is the fifth cut to the global forecasts in 15 months and has been driven by the unexpected UK vote to leave the European Union.

Brexit has “thrown a spanner in the works", said Maurice Obstfeld, IMF chief economist and economic counsellor, adding that the decision creates a wave of uncertainty amid already-fragile business and consumer confidence.

The global forecast for 2017 has been cut by 0.1% to 3.4%. If not for Brexit, the IMF said global forecast would have been slightly higher.

The move included a nearly full percentage-point reduction in the UK's 2017 growth forecast.

“The Brexit vote implies a substantial increase in economic, political, and institutional uncertainty, which is projected to have negative macroeconomic consequences, especially in advanced European economies,” according to the IMF’s World Economic Outlook Update released today.

UK and European economies will be hit the hardest by fallout from the June 23 referendum which prompted a change of government in Britain, the report added.

Global growth, already sluggish, will suffer as a result, IMF predicts putting the onus on policy makers to strengthen banking systems and deliver on plans to carry out much-needed structural reforms.

Policymakers in the UK and the EU will play a key role in tempering uncertainty that could further damage growth in Europe and elsewhere, the IMF said.

The IMF called on them to engineer a “smooth and predictable transition to a new set of post-Brexit trading and financial relationships that as much as possible preserves gains from trade between the UK and the EU.”