NRT briefing
UK growth upgraded but energy prices and rates to bite in 2027
Based on reporting by BBC News.
The Brief
The International Monetary Fund (IMF) has upgraded its forecast for UK economic growth in 2026 to 1.3%, up from a previous prediction of 1%, according to a report published on 13 October 2026. The IMF said the UK economy would then slow to 1.2% growth in 2027, citing higher energy prices and long-term interest rates weighing on household spending and business investment.
The report noted that the UK is one of the only major economies on course to stabilise its national debt, with borrowing projected to fall by nearly four percentage points of GDP from 2025 to 2031, the lowest in the G7 by 2031.
IMF Chief Economist Silvana Tenreyro said the UK had already started its consolidation process and should "stay the course." Chancellor John Healey said the government would provide "some breathing space" for households in the Budget, due on 28 October 2026, amid pressures from rising borrowing costs and expectations that inflation will average 3.3% this year and remain above the Bank of England's 2% target at 2.8% in 2027.
The Resolution Foundation called for "repairs" to public finances while supporting families struggling to heat their homes. Conservative shadow chancellor Andrew Griffith warned that further tax rises would mean slower growth and working people paying the price.