IMF raises Britain's 2025 growth forecast, citing economic recovery

LONDON - The International Monetary Fund (IMF) on Tuesday revised Britain's 2025 economic growth to 1.2 percent, up slightly from the 1.1 percent forecast in April.

The IMF attributed the revision to an economic recovery in Britain, noting that growth is expected to gain momentum after a slowdown in the second half of 2024.

Preliminary data showed that the British economy outperformed market expectations in the first quarter of 2025, with gross domestic product (GDP) rising by 0.7 percent quarter-on-quarter.

The IMF projected the country's economy to grow 1.4 percent in 2026. It cited several contributing factors, including monetary easing, improved household wealth and an uptick in consumer confidence, and increased public spending outlined in the October budget.

However, the IMF also cited some downside risks, including global trade tensions, slower activity in the British trading partners, and the direct impact of remaining US tariffs. The fund estimated that global trade tensions could lower Britain's GDP by 0.3 percent by 2026.

It also warned that tighter-than-expected financial conditions, combined with rising precautionary saving by households, would also hinder the rebound in private consumption and slow the recovery.

Looking ahead, the IMF noted that the British government's fiscal strategy for the next five years appropriately supports growth while safeguarding fiscal sustainability. But it cautioned that difficult fiscal choices will likely be needed to address spending pressures and rebuild fiscal buffers in the longer term.