The International Monetary Fund has predicted that the recession-hit British economy will shrink by 4.2 % this year because of the financial crisis.

However, the IMF believes that cross-channel growth will return in 2010.

The latest forecast, unchanged from a previous estimate, was published in the IMF's latest health-check of the British economy, in which it also warned about the fragility of banks in Britain and rising public debt.

The IMF forecast that the British economy would grow by 0.2% next year, again unchanged from an earlier estimate.

The British economy had recorded growth of 0.7% in 2008.