Three things we've learnt about the UK economy from the IMF
The influential economics body has upgraded its UK growth forecast for this year, but risks remain.
By BBC News
The International Monetary Fund has upgraded its forecast for UK economic growth this year, but warned that higher energy prices and interest rates could put further pressure on households and businesses.
The IMF expects the UK economy to grow by 1.3% in 2026, up from its previous forecast of 1% made in July.
The revised figure means the UK is expected to be among the faster-growing major advanced economies this year. Its forecast puts the UK level with Germany and behind only the United States among G7 economies.
The IMF also said the UK had so far weathered the economic effects of the Iran war better than expected.
However, the organisation lowered its growth expectations for 2027. It said higher energy costs and elevated interest rates were likely to affect household spending and business investment next year.
Households are also expected to remain under pressure from rising prices. The IMF forecasts that UK inflation will average 3.3% this year.
Its estimate for next year’s inflation rate has been increased to 2.8%, up from the previous forecast of 2.4%.
The IMF said the UK was making progress in dealing with its borrowing position. By 2031, it projects that the UK will have the lowest annual borrowing rate among the G7 group, which includes Canada, France, Germany, Italy, Japan and the United States.