Washington DC, 15 October (H.S.): The International Monetary Fund has projected that the United Kingdom’s economy will be the second-fastest growing among the G7 nations in 2025, expanding at a rate of 1.3%. However, this positive outlook is tempered by the forecast that the UK will also face the highest inflation rate in the G7 group for both this year and the next.
In its latest World Economic Outlook, the IMF stated that while the UK is weathering global economic challenges better than many peers, its growth remains modest. The report highlighted a significant concern: on a per-head basis, the UK’s economic output growth is expected to be the slowest in the G7, at just 0.4% this year and 0.5% in 2026.
This suggests that despite the headline growth, improvements in individual prosperity may lag.Chancellor Rachel Reeves, attending the IMF meetings in Washington, acknowledged the public sentiment that the economy feels stuck and affirmed her commitment to addressing the issue. She aims to reassure international partners of the UK’s financial stability and promote it as a prime location for investment.
The IMF’s report forecasts UK inflation at 3.4% this year and 2.5% in 2026, warning that these persistent price pressures will continue to squeeze households. Bank of England Governor Andrew Bailey noted that inflationary pressures appear to be easing, citing recent data showing rising unemployment and slowing wage growth.
In contrast, Shadow Chancellor Sir Mel Stride described the IMF’s assessment as grim reading, criticizing the Labour government for the rising cost of living.The global economic picture presented by the IMF was dominated by several key risks:
US Tariffs: The economic drag from tariffs imposed by President Donald Trump’s administration is beginning to impact global growth and consumer prices in the US, although the effects have been more muted than initially feared.
AI Optimism: The Fund warned of excessively optimistic market expectations surrounding artificial intelligence, which could trigger a correction. It noted that the overvaluation is concentrated in a few tech companies, a situation more pronounced than during the 2000 dot-com bubble.
Peer Economies: Other major European economies like Germany, France, and Italy are projected to grow much more slowly, between 0.2% and 0.9%. Canada is expected to retake its spot as the second-fastest growing G7 economy in 2026.
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Hindusthan Samachar / Jun Sarkar
