The IMF has raised its UK growth forecast for 2026 to 1.3%, but said higher energy prices and interest rates are likely to slow the economy in 2027.
01Summary
- 01The IMF now expects the UK economy to grow by 1.3% in 2026, up from 1% in its July forecast.
- 02It said growth is likely to slow to 1.2% in 2027 as higher energy prices and long-term interest rates weigh on spending and investment.
- 03Inflation is forecast to average 3.3% this year and remain above the Bank of England's 2% target in 2027 at 2.8%.
- 04The UK is projected to have the lowest annual borrowing rate of all G7 countries over the next five years.
- 05Chancellor John Healey is preparing the first Budget under Andy Burnham's government, due on 28 October.
02Why it matters
The forecast points to firmer near-term growth, but also to more pressure on household budgets from inflation, energy costs and borrowing costs. It also sets the backdrop for the Budget, where tax and spending decisions could affect households and public services.
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