{"id":98591,"date":"2025-10-15T03:13:00","date_gmt":"2025-10-15T03:13:00","guid":{"rendered":"https:\/\/sotnews.agency\/?p=98591"},"modified":"2025-10-15T03:13:00","modified_gmt":"2025-10-15T03:13:00","slug":"uk-will-be-second-fastest-growing-g7-economy-imf-predicts","status":"publish","type":"post","link":"https:\/\/sotnews.agency\/?p=98591","title":{"rendered":"UK will be second-fastest-growing G7 economy, IMF predicts"},"content":{"rendered":"
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\n \t<\/i> Read Time:<\/span>4 Minute, 19 Second <\/div>\n\n <\/div>
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The UK is set to be the second-fastest-growing of the world\u2019s most advanced economies this year, according to new projections from the International Monetary Fund (IMF).<\/p>\n

But the IMF also predicts the UK will face the highest rate of inflation among G7 nations both this year and next, driven by rising energy and utility bills.<\/p>\n

The forecasts are part of the Fund\u2019s twice-a-year outlook for the global economy.<\/p>\n

It said so far there had been a \u201cmuted response\u201d to the wave of tariffs imposed on imports to the US this year, but that they were having an impact on global growth.<\/p>\n

The IMF, whose purpose is to bring its 190 members together to work on maintaining global economic stability, is a respected forecaster. However, uncertainties, ranging from geopolitics to the weather, often derail expectations.<\/p>\n

According to the Fund\u2019s latest predictions, unveiled as government officials gather in Washington DC, the UK appears to be weathering the storm better than others.<\/p>\n

The IMF predicts that in 2025 the UK economy will outperform other G7 economies, apart from the US, in what has been a torrid year for trade and geopolitical tensions.<\/p>\n

The G7 are a grouping of the world\u2019s richer countries, including the US, Canada, Germany, France, Italy, the UK and Japan, but not fast-growing economies such as India and China.<\/p>\n

Despite edging ahead of most rivals, UK economic growth rates are expected to remain modest at 1.3% for this year and next.<\/p>\n

Moreover, on a per head basis economic output is only set to grow 0.4% this year and 0.5% in 2026, putting the UK at the bottom of the G7 league table.<\/p>\n

Chancellor Rachel Reeves who arrived in Washington on Tuesday, said people sensed the economy was \u201cstuck\u201d.<\/p>\n

\u201cWorking people feel it every day, experts talk about it, and I am going to deal with it,\u201d she said.<\/p>\n

She will use the IMF gathering to try to provide reassurance over the UK\u2019s financial stability and tout the country as an attractive place for investment.<\/p>\n

Price pressures<\/h2>\n

However, the IMF warned the UK still faces stronger inflation than in other similar countries, with prices forecast to rise by 3.4% this year and 2.5% in 2026. The IMF said higher inflation was likely to be temporary and should fall to 2% by the end of next year.<\/p>\n

Speaking at a separate event in Washington, Bank of England governor Andrew Bailey said he also believed inflationary pressures were easing, after\u00a0unemployment data\u00a0in the UK on Tuesday showed unemployment rising and wage growth slowing.<\/p>\n

Highlighting the inflation forecasts, shadow chancellor Sir Mel Stride said the IMF assessment made for \u201cgrim reading\u201d.<\/p>\n

He said UK households were \u201cbeing squeezed from all sides\u201d, adding: \u201cSince taking office, Labour have allowed the cost of living to rise, debt to balloon and business confidence to collapse to record lows.\u201d<\/p>\n

Trump tariffs loom large<\/h2>\n

The\u00a0IMF\u2019s global outlook\u00a0was dominated by the reaction to US tariffs, a weakened dollar, questions about the independence of the US Federal Reserve and sky-high valuations of US tech companies, the Fund said.<\/p>\n

The IMF said resilience was \u201cgiving way to warning signs\u201d and that US tariffs costs, were starting to feed through to higher prices for American shoppers.<\/p>\n

However, in an interview with the BBC, the IMF\u2019s chief economist, Pierre-Olivier Gourinchas, said the worst consequences of a global trade war had been tempered.<\/p>\n

\u201cThe effect of the tariff shock is there. It is negative for the global outlook. It is weighing down on investment and consumption decisions, there is trade policy uncertainty\u2026 but it\u2019s not as bad as expected because the shock itself has been scaled down and there are these offsets,\u201d he said.<\/p>\n

The IMF cited Brexit as an example of how uncertainty around major changes in trading arrangements can, after a delay, lead to steady falls in investment, and he said the Bank of England should be \u201cvery cautious\u201d about cutting interest rates as expectations around future inflation remained high.<\/p>\n

The IMF\u2019s forecast noted that Canada\u2019s economy, hit hard by the trade war with the US, will be pushed into second place in the growth league table this year. <\/p>\n

However, Canada is expected to retake second place next year when its economy is forecast to grow at a rate of 1.5%.<\/p>\n

Germany, France and Italy are all forecast to grow far more slowly at rates of between 0.2 and 0.9% in 2025 and 2026.<\/p>\n

AI warning<\/h2>\n

The IMF also pointed to \u201cexcessively optimistic\u201d expectations around AI, which could trigger a market correction.<\/p>\n

In its separate Global Financial Stability Report the IMF concluded that markets appeared \u201ccomplacent\u201d.<\/p>\n

Mr Gourinchas said the IMF was not asserting that there would be an imminent bursting of a bubble, but that this was \u201cone of the risks\u201d it was looking at.<\/p>\n

The concentration of the overvaluation of tech stocks on a small number of companies was now \u201csubstantially higher\u201d than at the dotcom bubble in 2020, the IMF said.<\/p>\n

However, Mr Gourinchas said the \u201cAI investment boom\u201d was also helping sustain US economic growth.<\/p>\n<\/div>\n

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