IMF increases British growth forecasts by warning taxes and expenses

The British economy is expected to increase a little more than expected in 2025, but the International Monetary Fund (IMF) warned that the Chancellor had to stick to her tax and expenditure rules.

In its annual health check for the economy, the IMF predicted growth of 1.2% this year, going to 1.4% in 2026.

He said that an economic recovery was “underway” after a boost In the first three months of the year.

Influence body forecasts occur a little more than a month after has downgraded his expectations For the United Kingdom from 1.6% in 2025 to 1.1%.

Luc Eyraud, the British IMF mission chief, said growth had been “very strong” in the first three months of the year.

The official figures published this month revealed that the economy had been stimulated by the increase in consumer spending and commercial investments, but the figures were during the period preceding the import prices imposed and taxes on British employers increased in April.

The IMF praised the government’s planning reforms and Investment in infrastructure Plans which, according to them, would increase growth “if they were properly implemented”.

But he added that a “high level of global uncertainty, volatile financial market conditions and the challenge of containing daily expenses” will mean that Chancellor Rachel Reeves will face “difficult choices” to balance taxation with long -term expenses.

He suggested some modifications to the government’s self-imposed budgetary rules, including the reduction in the number of times the Budget Liability Bureau (OBR) produces an assessment of the United Kingdom finances once a year, rather than twice.

Budgetary rules are self-imposed by most governments in rich countries and are designed to maintain credibility in the financial markets.

The government has repeatedly said that its rules were “non -negotiable”.

The Chancellor has two main rules which, according to her, will bring stability to the British economy:

• The costs of the daily government will be paid by tax income, rather than to borrow
• For debt to drop as a share of national income by the end of this Parliament in 2029/30.

The growth of next year will be increased by global trade tensions, including fewer activities among the trade partners of the United Kingdom, the impact of the prices of American President Donald Trump and “persistent uncertainty”, according to the IMF report.

The combination of these factors will reduce the growth of next year up to 0.3% by 2026, he said.

But the IMF highlighted the trade agreements that the United Kingdom has concluded with countries like the EU, India and the United States, claiming that they have demonstrated the government’s commitment to “establish a more foreseeable environment for British exporters”.

Chancellor Reeves praised the report, saying that government’s commercial transactions “protected jobs, increased investments and reduce prices”.

The report just comes a month later The IMF has reduced its expectations for the growth of the United Kingdom this year to 1.1%, which, according to him, was due to an increase in borrowing costs, the American prices and a stroke of inflation.

He added at the time that inflation in the United Kingdom slowed down to 2.2% by 2026, near the target of 2% of the Bank of England.

Earlier this month, the National Statistics Office said Inflation increased unexpectedly in April at 3.5%, compared to 2.6% in March. Tuesday, the IMF said that this increase in inflation will last until this year this year, returning to the target “later in 2026”.