Business · Economy · 1 hr ago
IMF raises UK growth forecast but expects a slowdown in 2027
The International Monetary Fund expects the UK economy to grow by 1.3% in 2026, more than it forecast in July.
It expects growth to slow to 1.2% in 2027 as higher energy prices and long-term interest rates affect household spending and business investment.
The IMF says economies have proved more resilient than expected to the energy price shock linked to the US-Iran war, but the conflict's economic effects remain uncertain.
It also expects UK inflation to average 3.3% this year and remain above the Bank of England's 2% target in 2027.
Higher inflation could make interest rate rises more likely, adding pressure on households and businesses.
Chancellor John Healey is preparing the government's tax and spending plans, due to be announced on 28 October, and says he will seek to give households some breathing space.
The IMF forecasts that UK government borrowing will fall over the next five years, while economists say the chancellor faces pressure to balance public spending, defence commitments and support for households.
The IMF has raised its forecast for UK economic growth in 2026 to 1.3%, from 1% in its July forecast.
It expects growth to slow to 1.2% in 2027 as higher energy prices and long-term interest rates weigh on spending and investment.
The IMF said the economic fallout from the US-Iran conflict remained “highly uncertain”.
UK inflation is forecast to average 3.3% in 2026 and remain above the Bank of England’s 2% target in 2027.
Chancellor John Healey is preparing the government’s tax and spending plans, due to be announced on 28 October.
- Who
- The International Monetary Fund issued the forecast. Chancellor John Healey is preparing the government’s tax and spending plans.
- What
- The IMF raised its UK growth forecast for 2026 and expects growth to slow in 2027.
- When
- The report was published on 13 October 2026.
- Where
- The forecast concerns the UK economy.
- Why
- The IMF expects higher energy prices and long-term interest rates to weigh on household spending and business investment in 2027.
This story does not have two clearly opposing sides.
The IMF forecast UK growth of 1% for 2026.
The IMF forecast UK growth of 1.3% in 2026 and 1.2% in 2027.
The government’s tax and spending plans are due to be announced.
- UK growth forecast for 2026
- 1.3%
- Previous forecast for 2026
- 1% in July
- UK growth forecast for 2027
- 1.2%
- Inflation forecast for 2026
- 3.3%
- Budget announcement
- 28 October
What people are saying
highly uncertain
provide some breathing space
reaches for more tax rises
Sources
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