- IMF has upgraded its 2024 UK GDP forecast to 1.1% from 0.7% in July
- No change to 2025 growth forecast of 1.5%
- The upgrade puts the government in a better position ahead of ‘difficult decisions’ in Budget next week
“Chancellor Rachel Reeves is looking for all the good news she can get ahead of the Budget and an upgraded UK economic forecast from the IMF has certainly come at the right time,” says Dan Coatsworth, investment analyst at AJ Bell.
“Stronger than previously expected economic expansion this year means the government isn’t starting its ‘difficult decisions’ strategy to repair the nation’s finances from a very weak position. The IMF’s new UK forecast of 1.1% growth in 2024 is lacklustre compared to 3.2% world economic growth, but something is better than nothing given the uncertain backdrop.
“There is a big risk the Budget contains a lot of bad news for consumers and businesses and potentially causes a wobble to the UK economy. The government has a desire to make the country stronger but it feels like this will be a two-stage approach. First it must fill the multi-billion-pound black hole in public finances and only then can it be in a position to accelerate economic growth.
“The government needs to start its journey from the highest economic point possible as it might be heading down the hill before it can climb back up and reach higher peaks.
“As for Labour’s mission for the UK to have the highest sustained growth in the G7 over consecutive years by the end of the parliament, it’s going to have to do a lot better than 1.1% to hit that goal.”
