The IMF’s Money‑Mind Says UK Growth is at Risk
Big news from the International Monetary Fund – they’re telling Britain that the latest wave of U.S. tariffs will take a bite out of the country’s economic future. According to the IMF, trade fights sparked by Donald Trump’s policies could shrink the UK’s 2026 growth by a few points.
2025 Forecast Gets a Boost
Despite the looming threat, the IMF has nudged the 2025 growth target upward. It now expects the UK’s GDP to rise by 1.2%, up from the 1.1% that was announced in April. The agency says the country is “recovering” – a hopeful spin in a world that’s been shaking its trade hubbub.
Next‑Year Outlook
- Growth Projection: 1.4% in 2026.
- Trade Tug‑of‑War: Estimated to shave off about 0.3 percentage points of that growth.
- Why? U.S. tariff uncertainty, slower momentum in UK partners, and the lingering effects of trade barriers.
Sunrise from Policy Reforms
Economists point to the UK’s hard‑working reforms as a potential silver lining. The plan focuses on:
- Eliminating regulatory bottlenecks.
- Modernising planning rules.
- Boosting infrastructure spending.
“If you put these reforms into action effectively,” the IMF says, “they could lift the economy’s potential upside.”
Chancellor Rachel Reeves Takes the Stage
Reeves, the new Chancellor, came on with a pep‑talk, claiming the UK is the fastest‑growing G7 economy for the first quarter of the year. She also highlighted three new trade deals that:
- Protect jobs.
- Fuel investment.
- Trim prices.
She added:
“Working people are feeling the effect – a national living wage push for 3 million workers, with wages surpassing inflation by £1,000 in the past year.”
Bank of England’s Action Plan
With this positive outlook, the Bank of England might keep easing monetary policy in a “gradual” manner. That’s the roadmap for potentially lowering interest rates this year and giving the economy a smoother ride.
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