Britain’s GDP will grow by 1.1 per cent in 2025, according to the fund – down from a rate of 1.6 per cent forecast in January. Next year’s growth will also be lower than previously expected.
In the latest edition of its world economic outlook published on Tuesday, the IMF said that Donald Trump’s tariffs “will lead to a significant slowdown in global growth in the near term”.
This year and next, the IMF predicted, Britain’s economy will grow more slowly than was thought in January when the last set of forecasts were published.The fund said: “For the United Kingdom, the growth projection for 2025 is 1.1 percent, lower by 0.5 percentage point compared to the forecast in January.
UK inflation will stand at 3.1 per cent over the course of this year, up from the 2.4 per cent previously expected. This is primarily due to the increase in the cost of energy and other bills whose price is set by the Government and regulators.
“The report also clearly shows that the world has changed, which is why I will be in Washington this week defending British interests and making the case for free and fair trade.”
The government has made growing the economy a key aim of this Parliament, which it hopes will help avoid further cuts or tax rises.
The world economic outlook called on governments to keep borrowing low in order to ensure that they are resilient in the face of markets chaos.
Any fiscal support for those affected by the tariffs should be time-limited and “narrowly targeted”, in contrast to interventions such as the subsidy on energy bills which the UK Government introduced in the aftermath of Russia’s invasion of Ukraine.
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