UK growth upgraded but energy prices and rates to bite in 2027
The IMF has upgraded its 2026 growth forecast for the UK economy to 1.3%, though it warns of a slowdown in 2027 due to rising energy prices and interest rates. The report also highlights that the UK is expected to maintain the lowest annual borrowing rate among G7 nations over the next five years.
Why it matters
This forecast provides critical context for the upcoming UK Budget, balancing short-term economic resilience against long-term fiscal pressures and global geopolitical instability.
Image source, Getty Images By Faisal Islam , Economics editor , Reporting from Bangkok and Michael Race , Business reporter , Reporting from London Published 14 minutes ago The UK economy is forecast to grow by more than previously expected this year before higher energy prices and interest rates hit growth in 2027, the International Monetary Fund (IMF) has said.
The organisation's latest report, which is closely watched by the government, said the UK economy would expand by 1.3% in 2026, up from the 1% it predicted in July, before slowing in 2027.
Economies across the world have proved more resilient to the energy price shock caused by the US-Iran war, the IMF said, but it warned the economic fallout from the conflict remained "highly uncertain".
Chancellor John Healey said the government would look to "provide some breathing space" for households in the Budget.
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