IMF upgrades UK growth outlook amid economic recovery

The UK economy is showing signs of recovery following a slowdown in late 2024, with the International Monetary Fund (IMF) revising its growth forecast to 1.2 per cent for 2025, up slightly from 1.1 per cent in April, and projecting 1.4 per cent growth in 2026.

The rebound is supported by monetary easing, rising consumer confidence, and increased public spending, according to the latest IMF assessment.

However, the IMF warned that medium-term growth will remain weak due to sluggish productivity and global trade tensions, which are expected to cut UK GDP by 0.3 per cent by 2026.

The IMF praised the government’s five-year fiscal strategy as growth-friendly and sustainable but urged it to stay the course on deficit reduction to stabilise public debt. It also recommended further reforms to the fiscal framework to reduce policy volatility.

In the longer term, the Fund said the UK will face difficult fiscal choices due to ageing-related pressures on pensions and healthcare, with public spending expected to rise by around 8 per cent of GDP by 2050.

On monetary policy, the IMF said the Bank of England should continue easing gradually while remaining flexible amid elevated uncertainty and fragile growth.

Attribution: Amwal Al Ghad English

Subediting: M. S. Salama