UK economic forecast boosted by IMF

The International Monetary Fund (IMF) has upgraded its projection for UK growth this year by 0.4% to 1.1% – the largest upward revision for any advanced economy.

In a boost to Chancellor Rachel Reeves as she prepares to travel to Washington for the IMF’s annual meeting this week, its latest world economic outlook predicts strengthening growth as “falling inflation and interest rates” stimulate demand.

The IMF’s improved view of UK performance is a significant increase on its July projection of 0.7% growth this year, and up by 0.6% from its April assessment.
Its projection of 1.5% of GDP growth in 2025 remains unchanged.

Responding to the announcement Ms Reeves, said: “It’s welcome that the IMF has upgraded our growth forecast for this year, but I know there is more work to do. That is why the budget next week will be about fixing the foundations to deliver change, so we can protect working people, fix the NHS and rebuild Britain.”

The US economy meanwhile is projected to have grown by 2.5% this year, an increase of 0.2% on the July projection, before falling back to 2.2% in 2025.

By contrast, the Euro area is projected to grow by just 0.8% this year, down 0.1%, rising to 1.1% next year, a downgrade of 0.3%.

The IMF’s more optimistic view of the UK economy comes after official figures in the last fortnight showed a return to growth in August following two months of stagnation, and a dip in inflation below the Bank of England’s target of 2% last month for the first time in three-and-a-half years.

Ms Reeves’s visit to Washington comes a week before she delivers her first budget, a crucial moment for her stewardship of the economy and the new Labour government.