Tue, 27 May 2025

Tue, 27 May 2025 IMF raises UK growth forecast as it warns on tax and spending

In its annual health-check for the UK economy, the IMF predicted growth of 1.2%, a marginal upgrade to its previous forecast.

* The IMF forecasts UK growth to be 1.2% in 2025, rising to 1.4% in 2026.
* The organization praises the government's planning reforms and infrastructure investment plans, but warns that a "high level of global uncertainty" and volatile financial market conditions will make it difficult for the Chancellor to balance taxation with spending.
* The IMF suggests changing some self-imposed fiscal rules, including cutting the number of times the Office for Budget Responsibility produces an assessment of the UK's finances from twice a year to once.
* However, the government has repeatedly said its rules are "non-negotiable" and that growth next year will be weighed down by global trade tensions.
* The IMF points out that while the UK has struck trade agreements with countries like the EU, India, and the US, these deals have had a limited impact on growth so far.
* Chancellor Reeves welcomed the report, but was criticized by her shadow counterpart Mel Stride, who said she had "already fiddled her fiscal targets" and changing them again would "run real risks with market confidence".
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