International Monetary Fund upgrades UK economic growth forecast

The International Monetary Fund has raised its growth forecast for the UK economy and backed Chancellor John Healey's plan to reduce the deficit. The IMF now expects UK GDP to grow by 1.3% in 2026. Its chief economist said the UK stands out among G7 nations because it has a clear plan to bring its finances under control. However, the IMF warned that growth will slow in 2027 because of higher energy prices and interest rates. The Bank of England has said inflation could rise above 4% early next year. Healey met other finance ministers at the IMF's annual meeting in Bangkok. Economists say he needs to find around £35 billion to avoid cuts to public services while also meeting defence spending targets.