IMF Upgrades UK 2026 Growth Forecast to 1.3% Amid Sticky Inflation Pressures

The International Monetary Fund has upgraded its 2026 UK economic growth forecast to 1.3%, up from the 1.0% projected in July, citing greater-than-expected economic resilience. However, growth is projected to slow to 1.2% in 2027 as high energy prices and elevated borrowing costs constrain spending and investment. Inflation is forecast to average 3.3% this year and 2.8% in 2027, above the Bank of England's 2% target, fueling expectations of additional interest rate increases. Despite fiscal strains, the IMF projects the UK will post the lowest G7 deficit-to-GDP ratio by 2031 at -1.4%.