What is the new growth forecast?
Earlier this year, the International Monetary Fund (IMF) upgraded its growth forecast for the UK economy to 1.2% in 2025. According to the IMF, the UK economy will gain momentum next year and grow by 1.4% in 2026, although weak productivity ‘continues to weigh on medium-term growth prospects.’.
What the forecast shows
This forecast follows official figures showing the UK as the fastest growing economy in the G7 during Q1 2025, demonstrating resilience despite global trade tensions and inflation challenges.
The IMF praised the UK government’s plans for the economy, stating that these ‘strike a good balance between supporting growth and safeguarding fiscal sustainability’. They also stated that further refinements of the fiscal framework could help minimise the frequency of fiscal policy changes.
The Bank of England should continue to ease monetary policy gradually, the IMF said. It also stated that calibrating the monetary policy stance has become ‘more complex’ given the recent pickup of inflation in the UK.
What the government has said
Commenting on the IMF’s forecast, Chancellor Rachel Reeves said: ‘The UK was fastest growing economy in the G7 for the first three months of the year and… the IMF has upgraded our growth forecast.
‘We’re getting results for working people through our plan for change – with three new trade deals protecting jobs, boosting investment and cutting prices, a pay rise for three million workers through the National Living Wage (NLW) and wages beating inflation by £1,000 over the past year’.
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