IMF Raises UK Growth Forecast, Warns Of Potential Risks From Trump’s Economic Policies

The international Monetary Fund upgraded UK forecast for growth into 2025. Its economists have seen UK’s GDP advance by as much as 1.6 per cent to end 2025, reversing earlier estimates from that of a modest 1.5%. This is good news for the Labour government because, according to the IMF, growth is being put down to increases in investment spending, improvements in household finances, and interest cuts by the Bank of England. The IMF projects that the UK economy will grow by 0.9% in 2024.

For instance, the IMF trimmed down growth outlooks for large economies in the eurozone-major economies like Germany, France, and Italy. For Germany, its growth forecast for 2025 was trimmed down from 0.8% to 0.3%, while for France it was trimmed down to 0.8%.

The Bank of England is expected to trim the rate by four quarters, bringing the rate down to 3.75% from the current level of 4.75%. Initial expectations of only two cuts are now looking higher with some reduced inflation and a weak set of retail sales reports.

IMF analysts noted that the Labour government’s fiscal policies are aimed at decreasing long-term UK debt. Chancellor Rachel Reeves underlined that the UK is on track to be the fastest-growing major European economy over the next two years and pointed out her commitment to growth through strategic investment and reform.

The IMF’s World Economic Outlook indicates that this year and the next will be marked by steady growth at 3.3% globally, though still below pre-pandemic levels. IMF Chief Economist Pierre-Olivier Gourinchas warned against possible risks brought by the policies of the new US administration through large-scale tax cuts, import tariffs, and regulatory rollbacks destabilizing both the US and global economies.

The IMF alerted that such measures would raise US debt, drive up inflation, and even threaten the credibility of using dollars as world currency. As such, relaxed regulations and policies would destabilize world trade while investment levels reduced financial instability in a country’s economy, added the IMF.