IMF lifts UK 2026 growth forecast to 1.0% amid Middle East risk

The International Monetary Fund has upgraded its forecast for the United Kingdom's economic growth this year but warned that the conflict in the Middle East and domestic political uncertainty pose significant risks to the outlook. The IMF now expects the UK economy to grow by 1.0% in 2026, an increase from its April forecast of 0.8%.

This revised projection follows official data showing the UK economy grew by 0.6% in the first quarter of the year, a stronger performance than many economists had anticipated. The IMF stated the economy entered the current period of global volatility with more momentum than expected, partly due to revisions to previous data. However, the forecast remains lower than the 1.3% growth the Fund predicted in January, before the escalation of conflict involving Iran.

The IMF's annual assessment notes that while the UK economy has shown resilience, the war in the Middle East is dampening near-term prospects. A prolonged conflict represents the main risk to the forecast, as it could lead to sustained higher energy and food prices and continued global market volatility, which would weigh on economic activity. The Fund also cautioned that domestic political...