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Tue, 13 Oct 2026

Tue, 13 Oct 2026 UK growth upgraded but energy prices and rates to bite in 2027

The IMF report comes as final preparations are being made to the first Budget under Prime Minister Andy Burham.

* The UK economy is forecast to grow by 1.3% in 2026, up from a previous prediction of 1%, before slowing to 1.2% in 2027 due to higher energy prices and interest rates.
* The International Monetary Fund (IMF) has upgraded its economic forecast for the UK, citing the country's resilience to the global energy price shock.
* IMF Chief Economist Silvana Tenreyro said that the UK is one of the only major economies on course to stabilise levels of national debt.
* The UK is projected to reduce its annual borrowing by nearly four percentage points of GDP from 2025 to 2031, significantly more than the rest of the G7.
* Government borrowing costs have surged, putting pressure on Chancellor John Healey to ensure his tax and spending plans are credible in the eyes of financial markets.
* Healey has promised to provide "some breathing space" for households in the Budget, which will be announced on 28 October.
* The IMF projects that inflation will remain above the Bank of England's target of 2% in 2027 at 2.8%, making it more likely that interest rates will rise.
* Healey is expected to meet with other finance ministers at the IMF's annual meeting in Bangkok, Thailand, on Tuesday to discuss how to limit the economic impact of global conflicts.