The International Monetary Fund has raised its forecast for the UK’s growth this year, saying it expects the country to rank as the second-fastest growing economy in the G7 group.
The IMF now projects UK GDP will expand by 1.3 percent in 2025 — a modest upward revision — while its estimate for 2026 has been nudged down by the same margin.
However, the fund warns that Britain is likely to experience the highest inflation among advanced economies over the next two years, estimating average annual inflation at 3.4 percent in 2025 and 2.5 percent in 2026.
IMF economists cautioned that much of the inflationary pressure arises from price adjustments in regulated sectors and one-off cost changes. Still, they flagged risks from rising wages and shifting public expectations about inflation.
Given these pressures, the IMF urged the Bank of England to tread carefully when considering interest rate cuts, recommending restraint until inflation is firmly under control.
