IMF Lowers UK Growth Forecast Just Weeks Ahead of Budget Announcement

The International Monetary Fund (IMF) has recently revised the growth forecast for the United Kingdom, just weeks ahead of a significant budget announcement. The updated estimate indicates a slight improvement, although challenges remain for the UK economy.

IMF’s Growth Forecast for the UK

The IMF has adjusted the UK’s growth projection, upgrading it by 0.2 percentage points for the year 2025. This revision is notable as it marks the second consecutive upgrade this year. However, the overall economic outlook continues to grapple with low productivity and growth challenges.

Key Concerns and Inflation

Despite the positive upgrade, inflation remains a pressing issue. The IMF has indicated that inflation rates are expected to rise due to changes in regulated prices, particularly affecting utility and energy costs. The risks associated with high borrowing costs and escalating debt levels further complicate the fiscal landscape.

• IMF’s revision: 0.2 percentage point increase for 2025
• Inflation concerns set to persist, especially in utility and energy sectors
• UK’s growth remains below expectations over the past 15 years

Government’s Response and Future Plans

Shadow Chancellor Rachel Reeves has emphasized the need for action to address the economic stagnation affecting working individuals. During a recent Cabinet meeting, she underscored the government’s commitment to lowering inflation, while acknowledging the ongoing challenges.

As the Chancellor prepares for the upcoming budget on November 26, the government seeks to influence economic performance through major planning reforms and trade agreements with nations such as the United States, India, and EU members.

Impact of Global Trade Policies

The IMF also cautioned that US tariffs may pose a threat to the UK’s economic activity. The cumulative impact of these tariffs is projected to reduce growth by 0.4 percentage points over the 2025-2026 period when compared to earlier forecasts from October 2024.

• Impact of US tariffs: 0.4 percentage point reduction in growth forecast
• Focus on medium-term growth through reforms and trade

The landscape ahead is uncertain, but the government’s proactive measures may play a crucial role in shaping the UK’s economic recovery and stability.