Recession worst is yet to come, IMF warns

The worst of the global economic crisis may be yet to come, the head of the International Monetary Fund warned today.

"The Group of Eight stance is that we are beginning to see some green shoots but nevertheless we have to be cautious," Dominique Strauss-Kahn said. "The large part of the worst is not yet behind us."

The pound and the euro both lost more than a cent as investors switched back into the dollar as Strauss-Kahn joined a succession of commentators cautioning on the global economic recovery.

Oil prices dipped as the dollar soared with Brent crude back below $70 after last week's mini rally.

The G8 finance ministers' meeting over the weekend said that it was still too early for countries to be looking at cutting budget deficits or clawing back much of the billions of dollars' support governments have been forced to give to banks.

"The G8, as expected, did not lay out the details of the exit strategies for their crisis policies," said Kosuke Hanao, head of treasury product sales at HSBC in Tokyo.

Forex traders said investors were moving away from the riskier currencies they had been buying all last week on increasing hopes of economic recovery in smaller countries. The CBI's prediction that recovery could start early next year in the UK did little to help the pound which dropped 1.3 cents against the dollar to $1.633. The euro was off 1.07 cents at $1.3893. Brent crude fell 93 cents to $69.99 a barrel.