The International Monetary Fund (IMF) recently released its own gloomy economic forecasts. They expect the UK’s growth to be only 1.2% this year and increase to just 1.4% by 2026. Those numbers are unchanged from the revised forecasts released in May. This stability bodes well for the British economy as the rest of the world emerges from COVID-19.
The IMF’s report highlights that the UK is set to become the third fastest-growing economy among the world’s most advanced economies this year and in 2026. Only the United States and Canada are projected to exceed the UK’s growth rates during this period. That is an extraordinary testament to the resilience of the British economy in a pretty dire international environment.
The IMF has cut its 2025 global economic growth forecast to a meager 3%. That represents a notable upward revision from the 2.8% estimate given in their April report, in tandem with the UK forecasts. By 2026, global growth is projected to fall as low as 3.1%. That is a considerably more upbeat picture for the global economy than forecast a few months ago.
A wave of American exports to the UK earlier this year helped drive that overall increase and is part of this rosy new projection. Overnight, U.S. companies scrambled to get their products on the UK market. They were looking to head off the huge new import tariffs that had been proposed by then-president Donald Trump. This surge in imports has underpinned UK trade and propped up economic activity more than expected, contributing to the IMF’s upgrade.
The IMF credits actions by various governments aimed at stimulating growth as a key driver behind the adjusted global economic forecasts. Combined with aggressive monetary policy, these efforts have forged a more favorable environment for recovery, enabling economies to bounce back rather quickly from their prior recessions.
The IMF’s global trade report highlights the crucial role of international trade dynamics, as well as government policies, in determining economic outcomes. For one, renewed easing of the impact of U.S. tariffs on imports of goods has dramatically lifted growth prospects. This realignment is at the root of increasing demands on the global as well as the UK economy.