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IMF forecasts stronger UK growth in 2026 before slowdown in 2027

The IMF expects UK growth to rise to 1.3% in 2026, then slow in 2027 as higher energy prices and interest rates weigh on the economy.

Reported · Written up by our desk · Europe

The International Monetary Fund upgraded its outlook for the UK, forecasting the economy would expand by 1.3% in 2026, up from the 1.0% it predicted in July, before slowing in 2027.

The IMF said higher energy prices and interest rates are set to hit the economy next year, while noting that economies have shown resilience to the energy price shock tied to the US-Iran war.

In its report, the IMF also warned that the economic fallout from the conflict remains highly uncertain.

In the UK, Chancellor John Healey said the government would look to provide some breathing space for households ahead of a Budget due on 28 October, with government borrowing costs having surged and added pressure to ensure the plans are credible to financial markets.

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