IMF raises UK growth forecast but expects 3.3% inflation
The UK government has confirmed that the Budget will be held on 28 October 2026.
The International Monetary Fund (IMF) has raised its 2026 growth forecast for the UK to 1.3% and expects consumer price inflation to average 3.3%, according to the October edition of its World Economic Outlook.
The outlook was published on 13 October. Reuters reported that the Fund had put UK growth for 2026 at 1.0% in July and 0.8% in April.
The Fund expects growth to ease to 1.2% in 2027, with higher energy prices and higher long-term interest rates weighing on consumption and investment. Its database has growth recovering to 1.6% in 2028.
The same database has UK inflation averaging 2.8% in 2027 and 2.0% in 2028. The rate was 3.4% in 2025. On those figures only the United States, at 3.6%, is forecast to have higher inflation than the UK among the G7 economies in 2026. Italy is also at 3.3%.
The latest official figures already show prices rising faster. The Office for National Statistics (ONS) said in its bulletin of 16 September that the Consumer Prices Index rose by 3.1% in the 12 months to August 2026. That compares with 2.9% in July.
The IMF database puts UK unemployment at 5.3% in both 2026 and 2027, compared with 4.9% in 2025.
Borrowing was £77.3bn in the financial year to August 2026, which was £8.1bn above the forecast of the Office for Budget Responsibility (OBR), according to the ONS public sector finances bulletin of 22 September. The OBR will publish updated fiscal forecasts to accompany the Budget, the same bulletin says.
