Live Updates > Live Update Details
2026-04-14 21:00:40
[IMF Sharply Lowers UK 2026 Growth Forecast to 0.8%, Iran War the Biggest Drag] ⑴ The International Monetary Fund (IMF) released its forecast on Tuesday, sharply lowering its 2026 UK economic growth forecast to 0.8% from 1.3% in January, the largest decline among the G7 economies. ⑵ The 2027 growth forecast was also lowered from 1.5% to 1.3%, a reduction of 0.2 percentage points. ⑶ The IMF attributed the weaker growth to the war between the US and Israel and Iran, which caused gas prices, on which the UK heavily relies, to double, and the energy price shock to slow the pace of interest rate cuts by the Bank of England. ⑷ The IMF warned that if the war continues, global growth forecasts could be further lowered, with UK inflation expected to average 3.2% overall in 2026, peaking at around 4%, before falling back to the Bank of England's 2% target by the end of 2027. ⑸ UK Chancellor of the Exchequer Reeves said before the forecast was released that she was "very frustrated and angry" about the lack of a clear exit plan or objective from the US in the war with Iran, calling it a "foolish act" that is affecting British households. (6) The IMF projects that the UK unemployment rate will rise from 4.9% in 2025 to 5.6% this year. (7) IMF Chief Economist Gulansha said that Reeves faces a “delicate operation” in balancing supporting the economy with pressure on UK public finances, noting that the UK government’s borrowing costs have jumped significantly since the outbreak of the war.
