IMF Predicts UK Economy to Surge to Second-Fastest Growth in G7, but Warns of Soaring Inflation
The International Monetary Fund (IMF) has upgraded its forecast for the UK economy, predicting it will be the second-fastest-growing among the world's most advanced economies this year and next. According to the IMF's twice-a-year outlook for the global economy, the UK is expected to experience modest growth rates of 1.3% for both years.
The upgrade in the UK's economic prospects comes as other major economies, including Germany, France, and Italy, face slower growth rates. However, the IMF also warns that the UK will face the highest rate of inflation among G7 nations both this year and next, driven by rising energy and utility bills. The Fund predicts that UK inflation will reach its highest level in the G7 in 2025 and 2026.
The IMF's forecast has been welcomed by some, but also raises concerns about the impact on households and businesses. Chancellor Rachel Reeves said, "Despite the IMF's upgrade to our economic growth, for too many people, our economy feels stuck." She added that the government is working to address the cost-of-living crisis and support those affected.
The IMF's warning about inflation is not unique to the UK. The Fund notes that a "muted response" has been seen globally to the wave of tariffs imposed on imports to the US, which has contributed to rising prices. However, the IMF predicts that this will be a temporary spike in inflation.
According to the IMF, the UK's economic growth is expected to outpace other G7 nations due to its strong services sector and robust consumer spending. The Fund also notes that the UK's trade relationships with the EU have been a key factor in its economic performance.
The IMF's forecast provides a mixed picture for the UK economy. While it predicts strong growth, it also warns of soaring inflation, which could have significant implications for households and businesses. As the government continues to work on addressing the cost-of-living crisis, the IMF's warning serves as a reminder that the UK's economic prospects are closely tied to global trends.
In response to the IMF's forecast, economists and experts are calling for policymakers to take action to address the underlying drivers of inflation. "The IMF's warning about inflation is a clear signal that policymakers need to take bold action to address the cost-of-living crisis," said one economist. "This means investing in measures that support households and businesses, such as increasing the minimum wage and improving public transportation."
As the UK economy continues to navigate the challenges of rising inflation and global economic trends, the IMF's forecast provides a timely reminder of the need for policymakers to take a proactive approach to supporting growth and addressing the cost-of-living crisis.
Sources:
International Monetary Fund (IMF)
BBC Business
Breaking News: BBC
This story was compiled from reports by BBC Business and BREAKING: BBC Breaking.
