IMF projects UK to have third-strongest G7 growth in 2025

The International Monetary Fund, IMF, has forecast Britain to have the fastest growth among major European economies in the year 2025.

This projection is said to be a boost to the Finance Minister, Rachel Reeves, who is under pressure over a slowdown since her party came to power in July.

The IMF on Friday raised its forecast for British growth for 2025 by 0.1 percentage points to 1.6%, making it the third-strongest among the Group of Seven advanced economies after the United States and Canada.

The global financial body outlook for British gross domestic product growth in 2026 remained at 1.5%, again the third-fastest in the G7 and unchanged from its October estimate.

According to the IMF chief economist, Pierre-Olivier Gourinchas, the modest growth upgrade reflected a net positive impact from Reeves’ first budget on October 30, as greater public investment would outweigh headwinds created by higher taxes as well as rising household incomes and Bank of England rate cuts.

In her response to the upgrade for 2025, Reeves said she would go further and faster to deliver economic growth.

The Bank of England forecast growth of 1.5% in 2025, partly reflecting a short-term boost to the economy from a temporary increase in public spending announced by Reeves on Oct. 30.

DAILY POST gathered that last month, the Organisation for Economic Cooperation and Development also raised its forecast for British economic growth to 1.7% from 1.2% previously.

However, Reeves’ spending plans are based on forecasts from the government’s Office for Budget Responsibility which pencilled in growth of 2% for 2025 and 1.8% for 2026.

DAILY POST recalls that British government 30-year borrowing costs hit their highest since 1998 on Monday, the biggest losers in a global bond selloff driven by concerns about higher inflation and borrowing under the imminent US presidency of Donald Trump.

However, British bond prices recovered later in the week after weaker-than-expected British and U.S. inflation data and slower-than-expected GDP growth in November, the first month after Reeves set out her budget plan.