The International Monetary Fund (IMF) has upgraded its forecast for the UK economy, predicting a growth rate of 1.4% in 2026, compared to 1.2% this year. The upgrade comes after a boost in the first three months of the year, with consumer spending and business investment driving growth.
However, the IMF warns that the Chancellor must stick to her rules on tax and spending, citing “high levels of global uncertainty” and volatile financial market conditions as challenges. The report also suggests that some changes to the government’s fiscal rules may be needed to balance taxation with spending in the long term.
The IMF praises the government’s planning reforms and infrastructure investment plans, which it believes will increase growth if properly implemented. However, it also notes that global trade tensions, including US President Donald Trump’s tariffs, will weigh down growth next year by 0.3%.
Chancellor Rachel Reeves has welcomed the report, saying that the UK’s trade deals are protecting jobs and boosting investment. The IMF expects UK inflation to slow to 2.2% by 2026, close to the Bank of England’s 2% target.
The upgrade in the IMF’s forecast is a significant boost for the government, but also raises questions about the Chancellor’s ability to stick to her fiscal rules.
Source: https://www.bbc.com/news/articles/cx2jy0jk231o