IMF upgrades UK growth forecast as fears over impact of Iran war diminish
Summary
The International Monetary Fund (IMF) has raised its forecast for UK economic growth this year from 0.8% to 1%, making it the third fastest-growing economy among the G7 nations in 2026. The IMF cited slower-than-expected negative effects from the Middle East conflict and a boost from advances in artificial intelligence (AI), while warning that risks remain from ongoing global uncertainties.Key Facts
- The IMF now expects the UK's economy to grow by 1% in 2026, up 0.2 percentage points from April’s forecast.
- The UK’s 2027 growth forecast remains unchanged at 1.3%.
- The US is predicted to grow by 2.3%, helped by increased AI investment.
- Canada, an oil exporter, is forecasted to grow by 1.1%.
- Inflation in the UK stayed steady in May, with markets expecting only one interest rate rise by next spring.
- Global economic growth is forecast at 3% in 2024 and 3.4% in 2025, down from 3.5% in previous years.
- The IMF notes that higher oil and energy prices have been partly balanced by growth in technology demand, especially AI.
- The IMF warns of ongoing risks from renewed conflict in the Middle East and possible sharp corrections in technology-related markets.
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