IMF upgrades UK growth forecast ahead of budget

LONDON — The U.K.’s growth forecast got an upgrade Tuesday as the International Monetary Fund (IMF) handed some rare good news to Chancellor Rachel Reeves a week out from her first government-wide budget.
In its latest world economic outlook and financial stability report, the IMF revised Britain’s GDP growth to 1.1 percent this year — up from 0.7 percent in its July projection.
The revised 2024 growth forecast puts the U.K. ahead of Germany, Italy and Japan, and equal with France. Predicted GDP growth for 2025 is unchanged at 1.5 percent.
“Growth is projected to have accelerated to 1.1 percent in 2024 and is expected to continue doing so to 1.5 percent in 2025 as falling inflation and interest rates stimulate domestic demand,” the IMF said in its report. 
The IMF’s report echoes a forecast from the Organization for Economic Cooperation and Development’s, which in September revised Britain’s GDP growth for 2024 to 1.1 percent, up from 0.4 percent in its previous May projection.
However, the latest U.K. growth projections are still far below global output, which the IMF predicts will hold steady at 3.2 percent in 2024 and 2025.
The new IMF figures come a week after better-than-expected inflation figures for the U.K. The Office for National Statistics (ONS) data put the U.K.’s rate of inflation at 1.7 percent on an annual basis to September, down from 2.2 percent the month before. 
Both metrics are a boost to U.K. Chancellor Reeves, who will unveil her first budget in just over a week’s time on Oct. 30, and who has pledged to ensure the U.K. has the highest sustained growth in the G7 by the end of this parliament.
However, official U.K. public sector borrowing figures for September show the scale of the challenge facing the country’s new finance minister, who has accused the previous Conservative administration of leaving a “black hole” in U.K. tax-and-spend plans.
According to figures published Tuesday by the ONS, the government borrowed £16.6 billion last month. That’s the highest amount since the Covid-19 pandemic and above the Office for Budget Responsibility’s March forecast. Public sector pay rises and debt interest payments were the biggest drivers, the ONS said on Tuesday morning.
“It’s welcome that the IMF have upgraded our growth forecast for this year, but I know there is more work to do,” Reeves said in a statement. “That is why the budget next week will be about fixing the foundations to deliver change, so we can protect working people, fix the NHS and rebuild Britain.”