- The International Monetary Fund (IMF) has advised the UK government to maintain its current fiscal strategy, backing the Chancellor's approach to deficit reduction and growth-friendly spending to mitigate market pressures and global challenges.
- The IMF provided a modest upgrade to Britain's economic growth outlook, now forecasting a 1 per cent GDP expansion for 2026, up from 0.8 per cent, though this remains lower than earlier predictions due to the escalating Middle East conflict.
- Despite the upgrade, the IMF warned that the ongoing conflict in the Middle East is dampening near-term prospects, threatening rising living costs and borrowing rates, and highlighted a prolonged war as the main risk to its forecasts.
- Chancellor Rachel Reeves welcomed the IMF's upgraded forecasts and endorsement of the government's economic plan, asserting that the choices made are strengthening the economy and preparing it for future challenges.
- The IMF projects inflation to rise to just under 4 per cent by the end of 2026 before returning to the 2 per cent target by late 2027, with interest rates expected to remain at 3.75 per cent for the remainder of the year under current energy price outlooks.
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