IMF urges UK to ‘stay the course’ on borrowing amid Starmer uncertainty
Summary
The International Monetary Fund (IMF) has advised the UK government to continue cutting its borrowing despite political uncertainty around Labour leader Keir Starmer. The IMF praised Chancellor Rachel Reeves for balancing deficit reduction with growth and raised the UK’s economic growth forecast for 2026.Key Facts
- The IMF recommends that the UK keeps reducing its budget deficit due to market concerns and risks.
- Chancellor Rachel Reeves was praised for managing a balance between reducing deficit and supporting growth.
- The IMF upgraded the UK’s growth forecast for 2026 from 0.8% to 1%.
- Concerns exist that Labour leadership challenges could lead to increased government borrowing.
- Andy Burnham, a potential Labour leader, had criticized borrowing but later showed support for current fiscal rules.
- UK government bond interest rates recently rose to their highest since 1998 before falling slightly.
- The IMF highlighted risks to the UK economy due to domestic uncertainty and global market volatility.
- Rising borrowing costs increase the UK government’s interest bill, which already uses about 10% of spending.
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