The International Monetary Fund has raised its UK GDP growth forecast for 2026 to 1.3%, citing a strong start to the year. However, the IMF also warned of potential declines in growth due to high oil prices and rising interest rates, adjusting its 2027 forecast down to 1.2%. IMF economist Silvana Tenreyro emphasized the importance of continuing fiscal consolidation as UK Chancellor John Healey prepares for his upcoming budget.
Healey faces pressure to introduce measures to support households amid rising energy costs. The Bank of England is expected to raise interest rates in November, reflecting broader trends in major economies as inflation expectations rise following geopolitical tensions.
As Chancellor Healey prepares his budget, watch for potential energy support measures and tax revenue devolution plans. The Bank of England's interest rate decision in November will also be crucial, impacting mortgage rates and consumer spending amid rising inflation concerns.