An analysis by the global economics body upgraded its forecast for the UK, projecting 1.2% GDP growth this year. It had previously forecast growth of 1.1%.
The body also reaffirmed its prediction that the UK economy will grow by 1.4% in 2026, despite global trade tensions wiping 0.3 percentage points off growth. Trade tensions will mean “persistent uncertainty, slower activity in UK trading partners, and the direct impact of remaining US tariffs”, it added.
Growth could be weaker than expected, the IMF warned, with global trade uncertainty affecting supply chains and weakening private investment. However, it added that structural reforms, including to England’s planning system and higher infrastructure investment, “could increase potential growth if properly implemented”.
The organisation praised the chancellor’s fiscal plans, which restored her £9.9bn headroom at the Spring Statement, stating that they “strike a good balance between supporting growth and safeguarding fiscal sustainability”. However, the UK must “stay the course and deliver the planned deficit reduction over the next five years”, it said, adding that “further refinements of the fiscal framework could help minimise the frequency of fiscal policy changes”.