UK growth forecast upgraded by IMF but risks remain

UK growth forecast upgraded by IMF but risks remain Just nowShareSaveAdd as preferred on GoogleFaisal Islam & Michael RaceEconomics editor & business reporterGetty ImagesThe International Monetary Fund (IMF) has upgraded its forecast for the UK's growth this year, but warned the Iran war and "domestic uncertainty" could hit the economy.The growth estimate has been upgraded to 1% from 0.8% for 2026 by the influential body, which said last month that the UK would be hit hardest by the Iran war among the world's advanced economies.In its latest forecast, it said the UK "remained resilient" but added a prolonged conflict in the Middle East risked hitting growth and resulting in "higher energy and food prices"."Domestic uncertainty could also add to the already volatile global environment, holding back consumption and investment decisions," it added.The upgrade comes after figures released last week showed the economy grew by 0.6% in the first three months of the year, led by a rebound in areas such as retailing and construction.The IMF said the UK economy had entered the latest global shock with "more momentum than expected".It said inflation, which is the rate prices rise at over time, would increase "temporarily" due to higher energy prices. What is the IMF and why does it matter?As the UK imports more energy than it produces domestically, it is more sensitive to rapid rises in global prices.But the IMF suggested the Bank of England does not need to raise interest rates this year in response."Holding rates for the remainder of the year should be sufficient to bring inflation back to target (2%) by end-2027," it said.The upgraded growth forecast was welcomed by Chancellor Rachel Reeves on Monday. Reeves said the upgrade in growth was "proof" that the government has the "right economic plan"."The choices I have made as chancellor mean our economy is in a stro...