The IMF World Economic Outlook projects the UK to grow about 1.3% in 2025, an upward revision driven by strong H1 expansion, while forecasting the highest G7 inflation in 2025–26 — roughly 3.4% in 2025 and 2.5% in 2026.
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IMF upgrades UK 2025 growth to 1.3% on stronger H1 performance
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Inflation is expected to be highest in the G7 in 2025–26, but IMF sees it returning to ~2% before 2027.
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Global growth revised to 3.2% in 2025; trade and immigration policies cited as downside risks (IMF World Economic Outlook, October 2025).
IMF World Economic Outlook UK growth 2025: IMF revises UK growth to 1.3% for 2025 and warns of higher G7 inflation in 2025–26; read the outlook and implications.
What is the IMF’s World Economic Outlook projection for UK growth in 2025?
The IMF World Economic Outlook UK growth 2025 projects UK GDP growth of about 1.3% for 2025, revised upward on the back of stronger-than-expected expansion in the first half of the year. The Fund also expects elevated inflation—peaking around 3.4% in 2025—before easing toward 2% by 2027 according to the WEO.
How will inflation and energy prices affect the UK economy in 2025–26?
The IMF attributes higher inflation in the UK to surging energy and utility bills, forecasting inflation of roughly 3.4% in 2025 and 2.5% in 2026. These projections are described as likely temporary, with the Fund expecting inflation to decline to near its 2% target before 2027. The WEO highlights that short-term energy shocks and pass-through to services are the primary drivers of the elevated readings.
Britain’s expansion in H1 2025 leads to an upward revision of its GDP
IMF Growth Projections for 2025
🇺🇸 US: 2.0%
🇩🇪 Germany: 0.2%
🇫🇷 France: 0.7%
🇪🇸 Spain: 2.9%
🇬🇧 UK: 1.3%
🇨🇳 China: 4.8%
🇯🇵 Japan: 1.1%
🇮🇳 India: 6.6%
🇷🇺 Russia: 0.6%
🇧🇷 Brazil: 2.4%
🇸🇦 Saudi Arabia: 4.0%
🇳🇬 Nigeria: 3.9% pic.twitter.com/pmeQ51geOW— IMF (@IMFNews) October 14, 2025
The IMF’s update shows the UK expanding by around 1.3% in 2025 following robust output in the first half of the year. The revision reflects improved domestic demand and front-loaded consumption, which the Fund notes has helped offset some headwinds from trade tensions. The WEO report, published October 2025, cites these developments while cautioning that medium-term performance will depend on energy prices, wage dynamics, and investment trends.
“This is the second consecutive upgrade to this year’s growth forecast from the IMF. But I know this is just the start. For too many people, our economy feels stuck.”
– Rachel Reeves, Minister of Finance of the UK.
The WEO also revised global growth for 2025 to 3.2%, up from a 3.0% projection in July. The IMF attributes part of the resilience to companies and households advancing consumption to avoid anticipated tariff effects, limiting the near-term economic disruption from trade measures.
What global risks does the IMF identify that could affect the UK outlook?
The Fund highlights protectionist trade measures and tightening immigration policies as key downside risks. In particular, the IMF warns that more restrictive immigration rules in the U.S. and elsewhere could reduce labor supply in key sectors—construction, hospitality, personal services and agriculture—and could shave between 0.3% and 0.7% off U.S. growth in certain scenarios, with spillovers for trading partners including the UK. The report also flags stretched equity valuations and the potential for an investment correction if markets overestimate productivity gains from generative AI (statement echoed by Kristalina Georgieva, Managing Director of the IMF).
Frequently Asked Questions
How certain is the IMF about the UK’s 1.3% growth forecast for 2025?
The IMF’s 1.3% forecast for UK growth in 2025 is based on current data through October 2025 and recent H1 outturns. It is conditioned on assumptions about energy prices and trade policy; the WEO explicitly notes risks from protectionism and immigration policy changes that could alter the outlook.
Will UK inflation fall back to the Bank of England target?
Yes. The IMF expects inflation to ease toward the Bank of England’s 2% target before 2027, assuming energy-price pressures moderate and wage dynamics remain contained. This answer follows the WEO’s assessment and is provided in plain language for voice queries.
Key Takeaways
- Growth upgraded: The IMF raised the UK’s 2025 GDP forecast to 1.3% following strong H1 performance.
- Inflation peak: The UK is forecast to have the highest G7 inflation in 2025–26 (~3.4% in 2025, 2.5% in 2026), but the Fund sees this as transitory.
- Downside risks: Protectionist trade measures, stricter immigration policies, and equity-valuation corrections are noted as primary risks to the outlook; monitor energy prices and labour market signals.
Conclusion
COINOTAG reporting — The IMF World Economic Outlook (WEO), published October 2025, upgrades the UK’s near-term growth outlook while warning of elevated inflation in 2025–26. Policymakers and investors should watch energy prices, wage trends, and trade and immigration policy shifts. For continuing coverage and data-led updates, follow COINOTAG’s economic briefs and WEO summaries.
Published: October 14, 2025. Updated: October 14, 2025. Author: COINOTAG.
