IMF Raises UK Growth Outlook After Recession
- The IMF has revised its economic growth forecast for the UK following a period of stagnation.
- The UK economy has recently experienced a shallow recession in late 2023.
- This adjustment signals potential recovery and optimism for economic prospects.
LONDON — The International Monetary Fund (IMF) has upgraded its growth forecast for the U.K. in 2024 to 0.7%, up from a previous estimate of 0.5%. This positive adjustment comes as the new Labour government, led by Prime Minister Keir Starmer, implements fiscal reforms aimed at revitalizing the economy. The IMF also maintained its 2025 growth projection for the U.K. at 1.5%, following a period of stagnation and a shallow recession in late 2023. Recent economic indicators have shown promise, with the U.K.'s GDP growth in May surpassing expectations at 0.4%. Anticipated events, such as the Euro 2024 soccer championship and Taylor Swift's Eras Tour, are expected to further stimulate economic activity. Investment bank Goldman Sachs has also raised its 2025 forecast for the U.K. economy to 1.6%, attributing this to the Labour government's plans for planning reform and enhanced trade relations with the European Union. Analysts from Jefferies noted that the Labour government's parliamentary majority could enhance the U.K.'s stability, making it a more attractive destination for investment. Concurrently, the Bank of England is expected to begin reducing interest rates, as inflation has reached the central bank's target of 2% and is projected to decline further. The IMF's updates also included growth upgrades for the euro zone, Spain, and China, while lowering its forecast for the U.S. economy. The organization highlighted global growth at 3.2% this year, but cautioned about rising inflation risks and the complexities they pose for monetary policy.