The International Monetary Fund raised its UK growth forecast for 2026 to 1.3 percent, signalling confidence in the government's fiscal approach. The fund's economic counsellor, Silvana Tenreyro, backed Chancellor John Healey's deficit-reduction strategy, saying the UK "stands out" among G7 countries for having a credible plan to narrow its budget shortfall.
Tenreyro's endorsement came shortly before Healey's first budget. She advised the government to "stay the course" on repairing public finances. The IMF's revised forecast reflects a more optimistic view of British economic prospects than its previous estimate, though the fund cautioned that growth is likely to edge down in 2025 before recovering to 1.3 percent the following year.
The upgrade offers political cover for a chancellor expected to announce tax rises or spending cuts in his imminent budget. While the IMF praised the UK's deficit-reduction plan relative to other wealthy nations, the fund also warned that the global economy "could soon test the limits of resilience," suggesting broader economic headwinds ahead.