The International Monetary Fund (IMF) has revised upwards its growth forecast for the UK economy in 2025, citing Labour's investment spending, improved household finances, and a series of interest rate cuts by the Bank of England. The IMF also warns against drastic policy shifts, particularly in the US, emphasizing the potential risks to global economic stability posed by large-scale tax cuts, import tariffs, and regulatory rollbacks.
The International Monetary Fund ( IMF ) has revised upwards its growth forecast for the UK economy in 2025, citing Labour's investment spending, improved household finances, and a series of interest rate cuts by the Bank of England. The IMF now predicts UK growth of 1.6% in 2025, an increase from its previous forecast of 1.5%. This positive outlook contrasts with the eurozone, where the IMF downgraded its growth forecast s for Germany, France, and Italy in 2025.
However, the IMF downgraded its UK growth forecast for 2024 to 0.9% from a previous projection of 1.1%. The IMF attributed the UK's improved outlook to a combination of factors, including Labour's increased investment spending, a strengthening of household finances, and the Bank of England's anticipated four interest rate cuts this year. The organisation believes these measures will contribute to a sustained period of economic growth. The IMF's assessment also highlighted the UK's projected growth rate for next year, which is expected to reach 1.6%, surpassing France, Germany, and Italy for a second consecutive year.The IMF's World Economic Outlook predicts global growth will remain below its pre-pandemic level but anticipates a steady expansion of 3.3% this year and next. Chief economist Pierre-Olivier Gourinchas expressed optimism that the global economy would move towards stability, citing the easing of disruptions caused by the pandemic and Russia's invasion of Ukraine. However, the IMF issued a warning against drastic policy shifts, particularly in the US, emphasizing the potential risks to global economic stability posed by large-scale tax cuts, import tariffs, and regulatory rollbacks. Gourinchas cautioned that such measures could trigger inflationary pressures, necessitate aggressive interest rate hikes by the Federal Reserve, and undermine the dollar's status as the world's reserve currency. He also warned that a surge in protectionist policies could exacerbate trade tensions, decrease investment, and disrupt global supply chains.
Economics Politics IMF UK Economy Growth Forecast Labour Government Interest Rates Donald Trump US Economy Tax Cuts Protectionism Global Economy
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