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Economic growth

IMF Upgrades UK Economic Growth Forecast Amid Trade Turmoil

Strategic Insights

— 2 min read

The International Monetary Fund (IMF) has upgraded its forecast for UK economic growth this year, despite warning of potential disruption from US tariffs. The global body expects UK GDP growth to reach 1.2% in 2025, up from its previous forecast of 1.1%. However, trade tensions with the US are expected to slow growth by 0.3 percentage points. The IMF notes that turmoil around US President Donald Trump's tariffs will lead to "persistent uncertainty, slower activity in UK trading partners, and the direct impact of remaining US tariffs on the UK."

Key Takeaways:

  • The IMF has upgraded its forecast for UK economic growth this year, predicting 1.2% GDP growth in 2025.
  • Trade tensions with the US are expected to slow growth by 0.3 percentage points in 2025.
  • The IMF warns that trade uncertainty could hit supply chains and cause a reduction in private investment, increasing the risk of weaker-than-expected growth.
  • The UK economy grew 0.7% in the first three months of the year, driven by large rises in aircraft and machinery equipment.
  • The IMF recommends that the Bank of England continue to ease monetary policy gradually by cutting interest rates further later in the year.
  • The IMF also suggests that Chancellor Rachel Reeves should refine her fiscal rules to prevent the need for emergency spending cuts.
  • The IMF notes that the UK government's efforts to overhaul planning rules and cut red tape could lead to future growth in the economy.
  • Chancellor Rachel Reeves has made delivering growth "further and faster" a central mission, targeting reforms across planning, pension investments, and energy.

Statistics:

  • The IMF has upgraded its forecast for UK economic growth to 1.2% in 2025 (https://www.cityam.com/uk-economy-booms-in-first-three-months-of-year/).
  • The UK economy grew 0.7% in the first three months of the year (https://www.cityam.com/uk-economy-booms-in-first-three-months-of-year/).
  • Trade tensions with the US are expected to slow growth by 0.3 percentage points in 2025 (https://www.cityam.com/gdp-grows-just-0-1-per-cent-following-budget/).
  • The Bank of England predicts that the UK economy will grow by one per cent this year and 1.25% in 2026 (https://www.cityam.com/uk-economy-booms-in-first-three-months-of-year/).
  • Chancellor Rachel Reeves has said that wages are beating inflation by £1,000 over the past year (https://www.cityam.com/reeves-doubles-down-on-fiscal-rules-amidst-waning-headroom/).

Sources:

  • https://www.cityam.com/uk-economy-booms-in-first-three-months-of-year/
  • https://www.cityam.com/gdp-grows-just-0-1-per-cent-following-budget/
  • https://www.cityam.com/reeves-doubles-down-on-fiscal-rules-amidst-waning-headroom/

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