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UK growth forecast upgraded but higher energy prices to hit economy next year
Overview
The International Monetary Fund (IMF) has upgraded its UK growth forecast for 2026 to 1.3%, up from 1% previously predicted. However, the organisation warns that growth will slow next year to 1.2% as higher energy prices and interest rates impact household spending and business investment. Chancellor John Healey is currently finalising tax and spending plans for the upcoming Budget on 28 October, while the IMF notes that the UK's debt management process is leading major G7 economies.
Key points
- The IMF upgraded the UK economic growth forecast for 2026 to 1.3%, up from 1% in July.
- UK growth is projected to slow to 1.2% in 2027 due to higher energy prices and interest rates.
- UK inflation is expected to average 3.3% this year, with next year's forecast increased to 2.8%.
- IMF chief economist Silvana Tenreyro stated that the UK's debt management process is leading the major G7 economies.
- Chancellor John Healey is preparing tax and spending plans for the upcoming Budget, which will be announced on 28 October.