UK Economy Surges to Second-Fastest Growth in G7, IMF Predicts
The UK's economic growth is expected to surge to the second-fastest pace among G7 nations this year and next, according to a new forecast from the International Monetary Fund (IMF). The upgrade to the UK's economic prospects comes as other major economies, including Germany, France, and Italy, face slower growth rates.
The IMF predicts that the UK will experience modest growth rates of 1.3% for both years, surpassing only the United States in terms of economic expansion among G7 nations. This forecast marks a significant improvement from previous projections, with the UK's economy expected to outperform its peers despite ongoing challenges.
However, the IMF also warns that UK inflation will reach its highest level in the G7 in 2025 and 2026, driven by rising energy costs. According to the IMF, prices are forecast to rise by 3.4% this year and 2.5% in 2026, but the organization predicts this will be a temporary spike. Inflation is expected to fall to 2% by the end of next year.
The UK's economic growth has been driven by various factors, including a strong services sector and a rebound in consumer spending. However, the IMF notes that the economy remains vulnerable to external shocks, particularly in the energy market. The organization warns that higher inflation could have long-term consequences for the UK economy if left unchecked.
Chancellor Rachel Reeves acknowledged the IMF's upgrade to the UK economic growth forecast but expressed concerns about the impact of rising prices on households. "For too many people, our economy feels stuck," she said. "We need to take action to support businesses and individuals affected by high energy costs."
The IMF's predictions come as other major economies face slower growth rates. Germany, France, and Italy are all expected to experience lower economic growth this year compared to the UK. The organization notes that these countries face unique challenges, including supply chain disruptions and labor market constraints.
The UK government has been working to address rising energy costs through various measures, including a price cap on energy bills. However, the IMF warns that more needs to be done to support households and businesses affected by high prices.
In conclusion, the UK's economic growth is expected to surge to the second-fastest pace among G7 nations this year and next, according to the IMF. While the forecast marks a significant improvement from previous projections, the organization warns that higher inflation could have long-term consequences for the economy if left unchecked. The government must continue to take action to support households and businesses affected by rising prices.
Attribution:
According to the International Monetary Fund (IMF)
According to BBC Business
As reported by Breaking News on BBC
This story was compiled from reports by BBC Business and BREAKING: BBC Breaking.
