IMF raises UK GDP growth forecast to 1.3% — The Guardian

At the IMF meetings in Bangkok, Thailand, the International Monetary Fund raised its forecast for UK gross domestic product growth in 2026 to 1.3%. This is 0.3 percentage points higher than its July estimate, The Guardian reports.

IMF economic adviser Silvana Tenreyro said that the UK stands out among G7 countries for having a plan to reduce the budget deficit. She urged Chancellor of the Exchequer John Healey to continue the course of restoring public finances ahead of his first budget, scheduled for October 28.

Forecast for 2027

At the same time, the IMF expects some slowing in the pace of UK economic growth in 2027. The fund lowered its forecast for next year to 1.2% from 1.3%, explaining this by the impact of high energy prices and long-term interest rates on consumption and investment.

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At the beginning of 2026, the UK economy grew faster than expected: GDP increased by 0.6% in the first quarter and by 0.5% in the second. The country’s Office for National Statistics cited the active expansion of artificial intelligence-related businesses among the factors behind this result.

Inflation and household support

According to the IMF’s estimate, average inflation in the UK will amount to 3.3% in 2026 and 2.8% in 2027. The fund placed the UK, along with Japan, among countries where core inflation, which excludes volatile prices for energy and other commodities, is unlikely to return to the 2% target by the end of 2027.

Healey is under pressure over a sharp rise in energy bills expected in January. The IMF recommends that governments not introduce broad subsidies but provide temporary, targeted assistance that does not distort the market. The budget is expected to include measures to support households before winter and plans to transfer more tax revenue to city halls.