UK growth forecast upgraded but higher energy prices to hit economy next year

What happened: The IMF upgraded its UK growth forecast for 2026 to 1.3% from 1%, but expects growth to slow in 2027 as higher energy prices and interest rates weigh on households and business investment. Key numbers: 2026 growth 1.3%, up from 1% predicted in July. 2027 growth 1.2%. Inflation to average 3.3% this year and 2.8% in 2027. Budget announced 28 October. Why it matters: The IMF projects the UK will have the lowest annual borrowing rate of all G7 countries over the next five years, but surging borrowing costs pressure the chancellor to keep Budget plans credible with markets.

The IMF upgraded its UK growth forecast for 2026 to 1.3% from 1%, but expects growth to slow in 2027 as higher energy prices and interest rates weigh on households and business investment.

The IMF projects the UK will have the lowest annual borrowing rate of all G7 countries over the next five years, but surging borrowing costs pressure the chancellor to keep Budget plans credible with markets.