IMF Raises UK Growth Forecast Amid Fiscal Caution

The International Monetary Fund (IMF) has slightly upgraded its UK economic growth projections, forecasting a 1.2% expansion in 2025 and 1.4% in 2026. This revision follows a stronger-than-expected performance in the first quarter of 2025, driven by increased consumer spending and business investment. However, the IMF cautions that Chancellor Rachel Reeves must adhere to stringent fiscal rules to maintain economic stability.

The IMF commended the government’s planning reforms and infrastructure investment initiatives, noting that their successful implementation could further bolster growth. Nonetheless, it highlighted challenges such as global trade tensions, volatile financial markets, and the necessity for prudent day-to-day spending management. The IMF also suggested reducing the frequency of fiscal assessments by the Office for Budget Responsibility from twice to once annually, a proposal the government has yet to accept.

In summary, while the IMF’s revised forecast indicates a positive short-term outlook for the UK economy, it underscores the importance of disciplined fiscal policies to navigate ongoing global uncertainties and ensure sustained growth.