IMF lifts UK 2026 growth forecast, sees 2027 slowdown

The International Monetary Fund raised its forecast for UK economic growth in 2026 to 1.3%, while projecting a slowdown to 1.2% in 2027 as higher energy prices and long-term interest rates weigh on the economy. The October World Economic Outlook, published Tuesday, lifted the 2026 estimate from 1.0% in the Fund’s July forecast. The IMF said stronger-than-expected economic performance in the first half of the year contributed to the revision. Its 2027 projection was cut from 1.3% to 1.2%. The Fund said higher energy costs and long-term interest rates are likely to restrain household consumption and business investment. It described the economic consequences of the conflict in the Middle East as highly uncertain, warning that prolonged disruption could keep energy prices elevated and volatile. The IMF expects UK inflation to average 3.3% in 2026 and 2.8% in 2027. It also projects unemployment will average 5.3% in both years. The inflation outlook remains above the Bank of England’s 2% target, while the Fund’s projections indicate a moderation next year.