The International Monetary Fund raised its forecast for UK economic growth in 2026 to 1.3%, from its July estimate of 1%, while predicting slower growth in 2027 as energy prices and interest rates weigh on the economy.
The IMF said economies had been more resilient than expected to the energy-price shock linked to the US-Iran war, but said the conflict’s economic effects remained “highly uncertain.” Chancellor John Healey said the government would seek to provide households with some breathing space in the Budget. He is preparing Andy Burnham’s government’s tax and spending plans, due to be announced on 28 October. The BBC reported that government borrowing costs have risen.