IMF raises the UK’s growth forecast – and backs Rachel Reeves
Reeves says country shouldn’t be ‘plunged into chaos’ amid Labour leadership speculation
The International Monetary Fund (IMF) has advised the UK government to maintain its current fiscal strategy, backing the Chancellor’s approach to deficit reduction and growth-friendly spending to mitigate market pressures and global challenges.
The IMF provided a modest upgrade to Britain’s economic growth outlook, now forecasting a 1 per cent GDP expansion for 2026, up from 0.8 per cent, though this remains lower than earlier predictions due to the escalating Middle East conflict.
Despite the upgrade, the IMF warned that the ongoing conflict in the Middle East is dampening near-term prospects, threatening rising living costs and borrowing rates, and highlighted a prolonged war as the main risk to its forecasts.
Chancellor Rachel Reeves welcomed the IMF’s upgraded forecasts and endorsement of the government’s economic plan, asserting that the choices made are strengthening the economy and preparing it for future challenges.
The IMF projects inflation to rise to just under 4 per cent by the end of 2026 before returning to the 2 per cent target by late 2027, with interest rates expected to remain at 3.75 per cent for the remainder of the year under current energy price outlooks.
