IMF Upgrades UK Growth Forecast, Warns Energy Prices and Rates Will Bite in 2027

3-line summary

• The IMF raised its 2026 UK growth forecast to 1.3% from 1% in July, saying global economies have proved more resilient to the energy price shock from the US-Iran war than expected, though it warned the conflict's economic fallout remains "highly uncertain," according to the BBC. Growth is projected to slow to 1.2% in 2027 as higher energy prices and long-term interest rates weigh on household spending and business investment.
• The IMF projected the UK would see a sharp fall in government borrowing and the lowest annual borrowing rate among G7 countries over the next five years, with the lowest annual deficit by 2031. The reversal of earlier downgrades means the UK is expected to be tied with Germany as the second-fastest-growing G7 economy this year. Chancellor John Healey, finalizing tax and spending plans to be announced October 28, said the government would seek to "provide some breathing space" for households.

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