The IMF has raised its UK growth forecast for 2026 to 1.3% from 1%, but also expects higher inflation and warns that energy prices and interest rates will weigh on activity next year.
01Summary
- 01The IMF now expects the UK economy to grow by 1.3% in 2026, up from 1% in its July forecast.
- 02It says the UK is on track to have the second-fastest growing economy in the G7 this year, alongside Germany.
- 03The IMF forecasts UK inflation will average 3.3% this year and has lifted next year’s estimate to 2.8% from 2.4%.
- 04The IMF said the UK is doing better than other major economies on borrowing and could have the lowest annual borrowing in the G7 by 2031.
- 05Tim Armitage of Quilter Cheviot said at least one Bank of England rate rise is predicted this year, with more expected next year.
02Why it matters
The report suggests the UK is holding up better than many peers, but households and businesses may still face higher prices and more expensive borrowing. That affects spending, investment and the outlook for growth.
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